Explanatory note

Subsection (2) of section 837A of the Income and Corporation Taxes Act 1988 (c. 1) (“section 837A”) defines “research and development” for the purposes of the provisions of the Tax Acts which apply that section as activities that fall to be treated as research and development in accordance with normal accounting practice.

Under subsection (3) of section 837A, the Treasury may provide that such activities as may be prescribed are, or are not, “research and development ”. Subsection (4) of section 837A provides that regulations under subsection (3) may make provision by reference to guidelines issued by the Secretary of State.

On 28th July 2000, the Secretary of State for the Department of Trade and Industry issued the “Guidelines on the Meaning of Research and Development (R&D) for Tax Purposes” (“the Guidelines”). These Regulations make provision by reference to the Guidelines.

Regulation 1 provides for citation and commencement, and regulation 2 for interpretation.

Regulation 3 prescribes activities by reference to the Guidelines.

The Guidelines are available on the Department of Trade and Industry’s website (http://www.dti.gov.uk/support/taxcredit) and copies may also be obtained from the Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET.