Research & Development relief

[simpsonite]

Will do,
thanks again for your helpful contribution,

regards,

simpsonite

[R AND D Consulting]

Excellent, glad the HMRC R&D folk could assist you, I've always found them to be very helpful which I'm told is unlike most other HMRC departments!

Cardiff tend to deal with the large claims, with the other 6 handling SME's although there is some cross over, a list of which one will deal with your claim based on your postcode can be found here - http://www.hmrc.gov.uk/manuals/cirdmanual/CIRD80360.htm

If you can get a patent granted then may be well worth looking into the patent box as Lambs said eventually this will give a 10% CT rate for any revenue generated from the patent.

[simpsonite]

Hi Lambs,
Just referring to my original query with regard to the treatment of this piece of Software development as Capital expenditure.
I assume that it will be deemed plant for AIA purposes?

[Lambs]

S,

Sorry, missed your post.

For a non-corporate, CAA 2001 s 71 will suffice to confirm that software counts as plant and eligible for CAs / AIA. (CA23410)

For a corporate, it is a little more complicated because of the rules for Corporate Intangibles - originally FA 2002 Sch 29 but now in CTA 2009 Part 8.

Certainly software is to my understanding an intangible asset 'by default' but CA 2001 (as above) is drawn to catch software - see also

http://www.hmrc.gov.uk/manuals/camanual/ca23410.htm

But the Corporate Intangibles rules COULD over-ride that for corporates.

However, see CTA 2009 s 813:

Computer software treated as part of cost of related hardware
Except as respects royalties, this Part does not apply to an intangible fixed asset held by a company so far as it represents expenditure by the company on computer software that falls to be treated for accounting purposes as part of the costs of the related hardware.

So if it be appropriate for you to account for this expenditure as part of a hardware project, (and from how you describe the project I should think you can although I am not an accountant) then you should be fine to claim CAs (AIA) on the expenditure as plant and machinery in any event.

If you are unable to treat the expenditure as part of the related hardware then make use of the specific election out of Corporate Intangibles and into CAs by virtue of CTA 2009 s 815 - see also CIRD25180.

But I am struggling to reconcile the initial proposed claim for R&D relief with that under CAs - one or the other?

Regards,

Lambs