10(1)Where—
(a)the company and the sub-contractor are connected persons, and
(b)in accordance with normal accounting practice—
(i)the whole of the sub-contractor payment has been brought into account in determining the sub-contractor’s profit or loss for a relevant period, and
(ii)all of the sub-contractor’s relevant expenditure has been so brought into account,
the whole of the payment (up to the amount of the sub-contractor’s relevant expenditure) is qualifying expenditure on sub-contracted land remediation.
(2)In sub-paragraph (1)—
(a)references to the “relevant expenditure” of the sub-contractor are to expenditure that—
(i)is incurred by the sub-contractor in carrying on, on behalf of the company, the activities to which the sub-contractor payment relates,
(ii)is not of a capital nature,
(iii)is incurred on employee costs or materials, and
(iv)is not subsidised;
(b)a “relevant period” means a period—
(i)for which accounts are drawn up for the sub-contractor, and
(ii)that ends not more than twelve months after the end of the company’s period of account in which the sub-contractor payment is, in accordance with normal accounting practice, brought into account in determining the company’s profit or loss.
(3)Paragraph 5 (employee costs) and paragraph 8 (subsidised expenditure) apply for the purposes of determining whether the sub-contractor’s expenditure meets the requirements of sub-paragraph (2)(a)(iii) and (iv).
For this purpose the references in those paragraphs to a company shall be read as references to the sub-contractor.
(4)Any apportionment of expenditure of the company or the sub-contractor necessary for the purposes of this paragraph shall be made on a just and reasonable basis.