It is based on the Department for Business, Innovation and Skills’ snappily titled ‘Guidelines on the Meaning of Research and Development for Tax Purposes’. These are from the Secretary of State for Trade and Industry and are designed to explain what R&D means in the context of the tax system. The guidelines “use a number of terms…which are intended to have a special meaning for the purpose of the guidelines.” These are the words and phrases that we are going to explain.
Why is it so difficult to understand?
Part of the problem is that HMRC are using words that already have a meaning. But they use them to create very specific tax regulation meanings. This could be single words, or multiple word phrases. You come to the language with a definition in place, which is then redefined – confusing in itself.
As HMRC rules need to include every possible scenario, there is a lot of detail. They are written with accessibility in mind and the actual language is clear. But all the ifs, ands and buts adds another layer of complexity. It requires a little patience to figure out the elements that apply to your particular situation. Our explanations simply state what is R&D and what isn’t R&D, where necessary, under those labels. As, basically, that’s what you want to know.
You already have experience of HMRC regulations and you know that it is crucial to properly understand your entitlement. Not least because your accuracy is demanded by HMRC and there is always the nagging worry of being penalised for making a mistake at your end.
How this Guide to R&D Definitions helps you
This guide starts by defining each of these terms “with special meaning”. A mini glossary of some R&D specifics.
Once we have these building blocks, we can click them together to make the broader definitions of R&D for tax purposes. It saves you time trying to find this information elsewhere.
R&D Terminology: The Building Blocks
These are listed in alphabetical order, so you can skim to exactly what you need as fast as possible.