A question can arise as to whether production can be treated as part of continuing research and development (R&D) rather than just the making of a product to meet an order. The HMRC position has been that production could never be treated as R&D if the product was actually sold to a customer. HMRC has now issued draft guidance on production which can benefit from R&D tax credits.
The reality for many businesses is that the R&D activity will continue after a company commences the process of making goods or services that are supplied to a customer.
The start point is the underlying principle that any activity must seek to achieve an advance in science or technology and that “activities which directly contribute to the advance, by resolving science or technological uncertainty, are R&D”.
Where a product is created as part your R&D activity it is important to show the degree to which its creation contributed to an advance by resolving scientific or technological uncertainty, rather than simply whether it was created with a view to supply to customers.
The draft guidance is available at www.hmrc.gov.uk/consultations/production-guidance.pdf
For further information/advice on this topic please contact enquiries@wardwilliams.co.uk or visit www.wardwilliams.co.uk
The reality for many businesses is that the R&D activity will continue after a company commences the process of making goods or services that are supplied to a customer.
The start point is the underlying principle that any activity must seek to achieve an advance in science or technology and that “activities which directly contribute to the advance, by resolving science or technological uncertainty, are R&D”.
Where a product is created as part your R&D activity it is important to show the degree to which its creation contributed to an advance by resolving scientific or technological uncertainty, rather than simply whether it was created with a view to supply to customers.
The draft guidance is available at www.hmrc.gov.uk/consultations/production-guidance.pdf
For further information/advice on this topic please contact enquiries@wardwilliams.co.uk or visit www.wardwilliams.co.uk
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