Guidance on research and development – overseas

Draft guidance on overseas research and development (R&D) activities and contracted out R&D published by HMRC in early February continued a welcome trend in R&D tax relief following last October’s Guidelines for Compliance (GfC3). Like GfC3 the latest draft guidance includes specific examples to illustrate how complex technical points will be applied in practice.

While a positive step critics might argue that the draft guidance comes far too late. The rules covered will apply for accounting periods beginning on or after 1 April 2024 – just one month after consultation on the draft guidance closes.

Timing issues aside the draft guidance is welcome particularly for contracted out R&D where the legislation itself is both brand new and potentially ambiguous on first reading.

HMRC has clearly taken on board feedback from earlier consultations meaning this version of the guidance is more detailed than earlier iterations....