»Ê¹ÚÌåÓýapp

In order for R&D tax relief to be due, qualifying conditions, set out in the legislation, must be satisfied.

Only a company (CIRD81200) can be entitled to the relief but companies can carry out R&D as members of partnerships (CIRD81220). »Ê¹ÚÌåÓýapp company must have incurred expenditure on R&D (CIRD81300) that is relevant to its trade (CIRD81400).

For there to be R&D for the purpose of the tax relief, a company must be carrying on a project that seeks an advance in science or technology. A company should be able when asked to state what the intended advance is, and to show how, through the resolution of scientific or technological uncertainty, the project seeks to achieve this.

»Ê¹ÚÌåÓýapp activities that constitute R&D for tax purposes are those activities undertaken as part of the project which fall to be accounted for as R&D under generally accepted accounting practice (i.e. be capable of being accounted for as R&D, whether or not they are) and also fall within the special definitions set out in the BIS Guidelines (formerly DTI Guidelines) for activities to be treated as either ‘directly contributingâ€� to seeking the advance in science or technology, or as ‘qualifying indirect activityâ€�. »Ê¹ÚÌåÓýapp BIS Guidelines (formerly DTI Guidelines) specifically exclude certain activities from the scope of R&D for tax purposes.

Not all activity which may be considered to be R&D within the ordinary accountancy or commercial meaning of the term will necessarily be R&D for tax purposes. While the accountancy meaning is where the definition begins for the purposes of the relief, it is qualified by guidelines issued by the BIS (formerly DTI) - see CIRD81900.

»Ê¹ÚÌåÓýapp advance being sought must constitute an advance in the overall knowledge or capability in a field of science or technology, not a company’s own state of knowledge or capability alone. Overall knowledge or capability in a field of science or technology means the knowledge or capability in the field that is publicly available, or is readily deducible from the publicly available knowledge or capability by a competent professional working in the field. Work that seeks an advance relative to this overall knowledge or capability is R&D.

Once the advance in science or technology has been articulated, the scope of the R&D project has been defined, and the project activities which fall within the definition of R&D for tax purposes have been identified, then the tax rules in CTA2009, described in this guidance, sets out what expenditure on those activities may be eligible for relief, and the conditions that must be satisfied for the expenditure to qualify for relief.

»Ê¹ÚÌåÓýapp expenditure must not be capital expenditure (CIRD81700). In addition to having been incurred the expenditure must also be allowable as a deduction in computing the profit of the period (CIRD81450) and must be on the categories of qualifying expenditure (CIRD81500).

»Ê¹ÚÌåÓýappre is a minimum amount of expenditure below which relief is not available (CIRD81600).

»Ê¹ÚÌåÓýapp company must also make a valid claim to the relief (CIRD81800).

Further conditions that apply only to the SME scheme

• Intellectual property rights resulting from the R&D must vest in the company. This condition is abolished for accounting periods ending on or after 9 December 2009,(CIRD81550).
• »Ê¹ÚÌåÓýapp company must not have been contracted to carry out the R&D (CIRD81470).
• »Ê¹ÚÌåÓýapp company must not have received a notified state aid for the R&D project (CIRD81670) and the expenditure is disqualified to the extent that it is subsidised (CIRD81650).
• »Ê¹ÚÌåÓýapp company must be a going concern (CIRD81130) at the time the claim is made.
• »Ê¹ÚÌåÓýappre is a limit of â‚�7,500,000 on the amount of aid for any given project (CIRD81160)