CIRD25160 - Intangible assets excluded from CTA09/PART8 as special tax rules apply: R&D: approach

CTA09/PART8/S814

Background

Accounting standards dealing with expenditure on听R&D include FRS102 s18, IAS38, FRS105 s13听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听some听being included as an intangible asset (under FRS105 s13, all R&D expenditure is听written off as incurred). There is a brief overview of the standards at CIRD99100 and CIRD99200.听

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.

听

Effect of provision

CTA09/PART8 preserves this position by excluding expenditure on research and development from the provisions in CTA09/PART8/CHAPTER3 (CIRD11000听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听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 the computational provisions in Chapters 2 to 4 of CTA09/PART8 that 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).