OT26026 - Capital Allowances: Research and Development Allowances: Using reserve reporting for deciding on the availability of RDAs

The establishment and reporting of reserves may be used as a mechanism for deciding the availability or non availability of RDA. The method can be accepted provided the details are recorded and clearly understood and applied by both the company and HMRC. The “cut off mechanism” is expected to produce a fair and reasonable overall result.

As noted in OT02200, the quantum of an entity’s commercial reserves may be shown by way of supplementary note in the annual report and accounts of an oil and gas exploration and producing company. An example of such disclosure would comprise reserves that are proved developed and proved undeveloped.