R&D expenditure

R&D expenditure

Didn't find your answer?

Just checking (I hope) - telephone charges do not qualify for R&D reliefs because they are neither consumable nor transformable materials?

Replies (3)

Please login or register to join the discussion.

By Steve Kesby
05th Jun 2015 14:40

If they relate...

... to the direct or indirect activities of an R&D project, I'd regard itemised call costs (but not standing charges) to be consumables, just the same as water, fuel and power. You have spent money on something that you have not used, and cannot use, on anything else.

Thanks (0)
avatar
By User deleted
05th Jun 2015 15:36

Is that correct, Steve?

We had a case a few years ago where HMRC denied relief (as I recall the amounts were not significant - only a few hundred quid - and so we didn't force the issue). HMRC's argument was that consumables are specifically defined - as the OP states - as materials that are either consumed or transformed (and specifically includes water, fuel and power). Telephone costs are costs of a service, not of materials.

By way of reverse analogy, when looking at pre-registration input VAT, one can claim for telephone costs - being services - but not gas and electricity - being consumable goods. I can't fault that analysis, or the reference in the legislation to materials, so think that the OP is actually correct.

And, although there is some misleading advice on GOV.UK, this is what HMRC currently say there:

Materials - consumable or transformable materials used directly in carrying out R&D. These are actual physical materials that are consumed in the R&D, and not things like telecommunication or data costs

So, at the very least, I would expect a challenge if telephone costs are included in a claim.

 

Thanks (0)
By Steve Kesby
05th Jun 2015 15:41

Agreed

I had referred to HMRC's manuals, rather than the legislation, on this occasion, and had missed the underlined materials in the OP.

HMRC's manuals refer extensively to consumable items, but then refer briefly to the definition as consumable materials and only give examples of consumable materials.

A telephone call is, in my view an item (implicitly of expenditure). I agree, however, that it is not a material.

Thanks (0)