[F1104KQualifying expenditure on contracted out R&DU.K.
(1)A company's “qualifying expenditure on contracted out research and development” means expenditure incurred by it in relation to which each of conditions A to D is met.
(2)Condition A is that the expenditure is incurred in making payments to—
(a)a qualifying body,
(b)an individual, or
(c)a firm, each member of which is an individual,
in respect of research and development contracted out by the company to the body, individual or firm concerned (“the contracted out R&D”).
(3)Condition B is that the body, individual or firm concerned undertakes the contracted out R&D itself.
(4)Condition C is that the expenditure is attributable to relevant research and development in relation to the company.
(5)Condition D is that, if the contracted out R&D is itself contracted out to the company, it is contracted out by—
(a)a large company, or
(b)any person otherwise than in the course of carrying on a chargeable trade.
(6)A “chargeable trade” is—
(a)a trade, profession or vocation carried on wholly or partly in the United Kingdom, the profits of which are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005, or
(b)a trade carried on wholly or partly in the United Kingdom, the profits of which are chargeable to corporation tax under Chapter 2 of this Part.
(7)See sections 1124, 1126 [F2to 1126B] and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development.]
Textual Amendments
F1Pt. 3 Ch. 6A inserted (with effect in accordance with Sch. 15 para. 27 of the amending Act) by Finance Act 2013 (c. 29), Sch. 15 para. 1
F2Words in s. 104K(7) inserted (with effect in accordance with s. 28(7) of the amending Act) by Finance Act 2015 (c. 11), s. 28(4)(f)