Section 1102: Qualifying expenditure on contracted out R&D
2863.This section defines “qualifying expenditure on contracted out research and development”. It is based on paragraphs 6 and 7 of Schedule 13 to FA 2002.
2864.The section covers payments to a sub-contractor. The conditions in the section have to be satisfied but it also necessary to isolate the sub-contractor element of the payment. This is described in sections 1134 to 1136.
2865.Subsections (3) and (4) also refer to the expenditure being attributable to qualifying R&D activity. See the commentary on section 1101.
2866.The section does not reproduce the condition in paragraph 7(5) of Schedule 13 to FA 2002 that the expenditure is not of a capital nature. This is not necessary as section 53 in Part 3 (trading income) already prohibits a deduction for capital expenditure.