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R&D tax credits: meaning of 'production' - CIOT comments

The CIOT comments, sent to HMRC on 27 September 2011, regarding draft legislation on 'production' for R&D purposes, to eventually replace the instructions at CIRD81350.

Many of you will be aware that the meaning of production for the purposes of R&D tax credits has been the subject of much disagreement and debate with HMRC over the past few years. While it is accepted that production is not R&D and expenditure on it does not, therefore, qualify for tax credits, the boundaries of what does constitute R&D and what is properly production have not been clear. The distinction is particularly difficult in relation to the development of prototypes and also in relation to the running of tests and trials.

HMRC has now published some draft guidance which addresses these issues. This is attached and is also available on HMRC’s website at:

Our submission is also available in Adobe (pdf) format.

Technical Team

27 September 2011


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