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Good guidance – as far as it goes: Part 2
Key points
- The government has introduced a new legislative definition of contracted out research and development (R&D) instead of adopting the existing one.
- Three tests must be met for R&D to be considered contracted out.
- HMRC states that ‘high level wording in a contract that R&D was required’ would not on its own satisfy the rules.
- The legislation reinforces the interpretation of ‘intended or contemplated’ as requiring the nature of the R&D to be articulated.
- On the evidence of this draft guidance HMRC has listened to feedback and sought to provide detailed and specific guidance.
In the first article of my review of HMRC’s draft research and development (R&D) guidance published in early February (tinyurl.com/hmrcdraftguidfeb24) I focused on the overseas element. In this second part I examine the draft guidance on contracted out R&D and what this means in practical terms for businesses and advisers.
Clarity...
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