New guidance from HMRC on Research and Development (R&D) tax relief ‘could be clearer’, according
to the Institute of Chartered Accountants in England and Wales (ICAEW).
HMRC’s draft guidance covers the restriction applying for contractor payments and payments for externally
provided workers (EPWs) where the R&D activity takes place overseas; and the new rules for contracted-out
R&D.
The ICAEW’s Tax Faculty believes that additional clarity would be helpful on a few of the new points.
It also said that the guidance‘does not fully address the implications of an arrangement between the
customer and the contractor that is governed by multiple contracts’. The Institute has called for the
guidance to explain how to determine if the contractor took R&D into consideration at the time of the
contract when multiple contract dates exist.
The ICAEW also called for clarity on the requirement that the carrying-on of R&D needs to be the primary
objective of the customer in engaging the contractor if the customer is to claim the associated R&D tax
relief.
Internet link: ICAEW website
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