HC Deb 06 July 1994 vol 246 c211W
Mr. Cousins

To ask the Chancellor of the Exchequer if he will place in the Library the Inland Revenue guidance on capital allowances for research and development; if he will outline the circumstances under which expenditure on the development of a specific product or technique qualifies for such allowance; if he will outline the legal or administrative source for the definition of research and development; and whether the guidance or definitions are currently under review.

Mr. Dorrell

Section 139(1) of the Capital Allowances Act 1990 defines scientific research as coveringany activities in the fields of natural or applied science for the extension of knowledge". Whether any particular activities fall within this definition will depend on the facts of the case. However, in general terms, activities constitute scientific research if they involve the application of new scientific principles in an existing area of research or the application of existing principles in a new area of research. The essential test is innovation.

Scientific research is generally regarded as including the development of a piece of fundamental research up to the production stage. Expenditure on construction of prototypes, pilot plant and so on qualifies for scientific research allowances if the prototypes are used to test the results of the basic research or the possibility of applying the results of the basic research to manufacture.

The Inland Revenue's main internal instruction books will be published as soon as practicable in accordance with the code of practice on access to Government information. Details of the publication arrangements should be available within the next few weeks.

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