Definition of research and development

Produced by Tolley in association with

Corporation Tax

Guidance

This guidance note provides information on what qualifies as research and development (R&D) tax relief for companies. The Research and development (R&D) relief ― overview guidance note provides an overview of the reliefs.

Research and development definition

The legislation defines research and development (R&D) as activities that fall to be treated as R&D in accordance with generally accepted accounting practice. The accounting definition is included in FRS 102 (or IAS 38 for international GAAP). This definition was modified by guidelines issued by the Secretary of State for Trade and Industry on 5 March 2004 (with updates made subsequently at various stages).

See Guidelines on the Meaning of Research and Development for Tax Purposes for the latest version. See also HMRC’s Guidelines for Compliance which expand on its view of the guidelines on the meaning of R&D for tax purposes and also how to identify qualifying R&D activities. Illustrative example of projects and qualifying activities are also provided.

FRS 102 defines ‘research’ as ‘original and planned investigation undertaken with the prospect of gaining new scientific

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