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HMRC internal manual

Corporate Intangibles Research and Development Manual

Intangible assets excluded from CTA09/PART8 as special tax rules apply: R&D: approach



Accounting standards dealing with expenditure on R&D include FRS102 s18, IAS38, FRS105 s13 and SSAP13. The specific requirements of these accounting standards differ but, with the exception of FRS105 s13, all will potentially result in some R&D expenditure being written off as incurred and some being included as an intangible asset (under FRS105 s13, all R&D expenditure is written off as incurred). There is a brief overview of the standards at CIRD99100 and CIRD99200

For CT purposes, revenue expenditure on R&D will normally be deductible when it is written off in the accounts. Some revenue expenditure will also qualify for R&D tax relief, see:

  • CIRD90000 onwards for research and development tax relief for small or medium sized enterprises;
  • CIRD85000 onwards for research and development tax relief for large companies; and
  • CA60000 onwards for the rules allowing a company to deduct capital expenditure on research and development as it is incurred, regardless of the accounting treatment.


Effect of provision

CTA09/PART8 preserves this position by excluding expenditure on research and development from the provisions in CTA09/PART8/CHAPTER3 (CIRD11000 onwards) which are concerned with expenditure written off as incurred and with deductions for sums written off assets.

Receipts from the exploitation of research and development remain within CTA09/PART8.

Where an asset representing research and development, or their fruits, is realised, deductions for the cost of the asset under CTA09/PART8/CHAPTER4 (CIRD13210 onwards) do not include expenditure on that research and development. That is because the expenditure will be deductible under the CT provisions outside CTA09/PART8.

CIRD25170 lists those computational provisions in Chapters 2 to 4 of CTA09/PART8, which continue to apply to assets representing expenditure on research and development.

The definition in CTA10/S1138 of R&D applies, with the inclusion of expenditure on oil and gas exploration and appraisal (see CIRD81900).