Where the science and engineering genuinely run out
Qualifying work is where the outcome is not readily deducible by a competent professional. Novel airframe and composite structures where fatigue, aeroelastic or combined thermal-mechanical behaviour cannot be predicted from existing knowledge; propulsion advances such as higher-temperature turbine materials, hydrogen or sustainable-fuel combustion, and thermal management; additive manufacture of flight-critical parts where the process-property relationship is unproven; autonomy, guidance and sensor-fusion, and detect-and-avoid for uncrewed systems; radiation- and thermal-hardened space electronics, deployable structures and re-entry materials; and defence electronics and advanced materials that appreciably improve on the baseline. Integrating subsystems into a platform, where whole-system behaviour is not deducible even when the parts are understood, is a legitimate route here.
The work that feels like R&D but is not
Much of the sector’s effort is governed rather than uncertain. Routine engineering to established standards where the design is deducible; airworthiness certification and type, qualification and acceptance testing to demonstrate conformance; integrating known or off-the-shelf systems by established methods; software built to an assurance process with no technological advance; and production, tooling, first-article and rate manufacture of a proven design. Bid, proposal and commercial trade-study work is outside too.
Who claims across the supply chain
Entitlement is the first thing to settle in this sector. The reformed rules turn on who intended or contemplated the R&D. When a prime contracts a Tier 1 or Tier 2 supplier, the customer that contracted out the R&D generally claims, and the supplier claims only where the work was not contracted out to it. Where the MOD, which does not claim, contracts out the R&D, a contractor may be able to claim. The document that decides it is the contract, read alongside who took the initiative, so we establish that before scoping the technical case.
Sector pitfalls we would check first
- Standards are not uncertainty. Building to CS-25, DEF STAN or MIL-STD is deducible engineering unless meeting the standard genuinely required advancing the field.
- The contracting analysis. Confirm who directed the R&D before the technical case. The subcontractor rules decide whose claim exists across a prime chain.
- The overseas restriction. For periods from 1 April 2024, overseas contractor and worker costs are excluded unless the conditions genuinely cannot be replicated in the UK. Specific overseas ranges or environments may qualify; offshoring for cost does not. The detail is on overseas costs.
- The sold prototype. Materials consumed in a prototype that is later sold or delivered are excluded, which matters for costly airframe and engine prototypes. The rule is on qualifying costs.
Frequently asked questions
Does building to CS-25, DEF STAN or MIL-STD qualify?
Not on its own. Engineering to an established standard, where a competent professional can deduce the design, resolves no uncertainty. The standard sets the target; R&D is only where meeting it required advancing the technology in a way that was not readily deducible.
We do a lot of qualification and type testing. Is that R&D?
Usually not. Testing to demonstrate that a design conforms to a requirement is a regulatory and commercial step. Testing done to resolve a genuine technological uncertainty can qualify. The distinction is why you are testing, not that you are testing.
We are a supplier to a prime. Whose claim is it?
It turns on who intended and contracted out the R&D. Where a prime directs the work, the prime may be the claimant and the supplier may not, and the reverse can also be true. Suppliers can no longer assume the claim is theirs: review the contract, because both claiming or neither claiming are the real risks.
Our work is classified. Can we still claim?
Yes, but the claim still needs the Additional Information Form and a competent professional's account of the advance and the uncertainty. The task is to substantiate that at an appropriate, unclassified level without breaching security or export controls, so keep contemporaneous records at the right classification.