time shell keyword not respecting value of TIMEFORMAT when set before command

TL;DR Add a semicolon between the variable and the command to change the scope of the variable. Without it the variable is a temporary one

TIMEFORMAT='%R'; time sleep 1.23; echo "$TIMEFORMAT"
1.231
%R

Also, Bash is executing /usr/bin/time instead of the time keyword when the variable is prepended to the command without a semicolon

If the reserved word time precedes the pipeline, Bash prints timing statistics for the pipeline once it finishes. ... Providing time as a reserved word permits the timing of shell builtins, shell functions, and pipelines. An external time command cannot time these easily.

TIMEFORMAT='%R' time sleep 1.23
0.00user 0.00system 0:01.23elapsed 0%CPU (0avgtext+0avgdata 3952maxresident)k
0inputs+0outputs (0major+104minor)pagefaults 0swaps

same as

/usr/bin/time sleep 1.23
0.00user 0.00system 0:01.23elapsed 0%CPU (0avgtext+0avgdata 4088maxresident)k
0inputs+0outputs (0major+106minor)pagefaults 0swaps

Passing the command to bash -c runs the command that picks the variable up

TIMEFORMAT='%R' bash -c 'time sleep 1.23'
1.231