HMRC revises draft R&D guidance

Following consultation earlier in 2023, HMRC has updated its draft R&D tax reliefs guidance which now reflects several changes to the original version, including:

• the previously announced restriction on some overseas expenditure will now come into effect from 1 April 2024 instead of 1 April 2023 - this will allow the government to consider the interaction between the restriction and the design of a potential merged R&D relief;
• where data or cloud services are used for multiple purposes, HMRC will accept the reasonable apportionment between the use for qualifying R&D and other uses (subject to retaining suitable evidence);
• details required for the claim notification form have been expanded, to include a summary of ‘high-level planned activities’ and three new examples;
•   the definition of mathematics for R&D purposes has also been clarified, with a new example added;
• the ‘additional information form’ start date has been updated to 1 August 2023 (from the previously proposed 1 April 2023); and
• a new section has been added specifically for ‘large business customers’.

The updated guidance will be formally published in HMRC’s Corporate Intangibles Research and Development Manual following Royal Assent to Finance (No 2) Act 2023 (expected at some point in summer 2023).