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HMRC internal manual

Capital Allowances Manual

RDA: Meaning of research and development

CAA01/S437 (2) and (3)

Research and development is defined in Section 437. Treat activities as research and development for CA purposes if normal accounting practice treats them as research and development and they satisfy the conditions set out in Guidelines produced by the Secretary of State for Trade and Industry. The DTI guidelines are dealt with at CIRD81300.

For CA purposes research and development also includes oil and gas exploration and appraisal. Oil and gas exploration and appraisal means activities carried out for the purpose of:

  • searching for petroleum anywhere in an area, or
  • ascertaining:
    • the extent or characteristics of any petroleum bearing area, or
    • what the reserves of petroleum of any such area are, so that it may be determined whether the petroleum is suitable for commercial exploitation.

 

Regulations defining activities to be or not to be research and development may be made under ITA/S1006.

Treat activities that are made to be research and development by regulations made under ITA/S1006 as research and development for RDA purposes.

You should not treat activities that are prevented from being research and development by regulations made under ITA/S1006 as research and development for RDA purposes.