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HMRC internal manual

Corporate Intangibles Research and Development Manual

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R&D tax relief: legislative structure and time line: FA04 changes

New definition of R&D

As mentioned at CIRD98050 the new definition came into force for accounting periods ending on or after 1 April 2004. While it is intended to make the meaning of R&D clearer it is not considered to materially change the definition of R&D; only to express it more simply and in a more structured way.

Changes to consumable stores and introduction of software

FA04/S141 introduced new categories of qualifying expenditure to replace consumable stores. These are expenditure on software (CIRD82500) and consumable items (CIRD82300).

These provisions come into force for expenditure on or after 1 April 2004.

When R&D revenue expenditure can be deducted

FA04/S53 (now CTA09/S1308) introduced a change to the rules for when expenditure can be eligible for the R&D tax relief, the change is given effect for expenditure incurred in accounting periods beginning on or after 1 January 2005 by a statutory instrument (SI2004/3268).

The effects are explained more fully at CIRD81450. The reason for this change was to prevent the adoption of IAS from delaying the availability of R&D tax relief (CIRD98500). The change applies whether the revenue expenditure is recognised as an intangible asset under IAS or under UK GAAP.