“A question I am often asked by teams is, can I claim R&D tax credits for testing?” says Phil Harris of Harris & Co the specialist motorsport accountants.
“Let’s say for example that you are racing a Ginetta,” explains Phil. “The manufacturer will have undertaken a lot of R&D already in creating the car.”
“If you take such a car testing, you are just setting it up for a particular circuit or driver. It has always been my view that you are not undertaking an advance in science or technology as defined in the R&D Tax Credit legislation. Consequently, testing like this is not an eligible piece of R&D Tax Credit expenditure.”
“I am aware that a number of teams are making R&D Tax Credit claims for testing like this,” said Phil. “However, I recently discussed the issue with Alan Bamford of HMRC’s R&D Tax Credit unit. His view was the same as mine.”
“Interestingly, HMRC have this issue in their sights and will be examining such claims for their eligibility for R&D Tax Credits,” said Phil.