SCHEDULES

SCHEDULE 31Tax relief for expenditure on research and development

Part 1Small and medium-sized enterprises: Schedule 20 to Finance Act 2000

Qualifying expenditure on sub-contracted R&D: externally provided workers

7

(1)

Paragraph 10 (treatment of qualifying expenditure on sub-contracted research and development where company and sub-contractor are connected persons) is amended as follows.

(2)

In sub-paragraph (2)(a) (relevant expenditure of sub-contractor) in sub-paragraph (iii) after “on consumable stores” insert “ or is qualifying expenditure on externally provided workers ”.

(3)

For sub-paragraph (3) (which applies paragraphs 5 and 8) substitute—

“(3)

For the purpose of determining whether the sub-contractor’s expenditure meets the requirements of sub-paragraph (2)(a)(iii) and (iv), the following provisions apply—

(a)

paragraph 5 (staffing costs),

(b)

paragraph 8 (subsidised expenditure), and

(c)

paragraphs 8A to 8E (qualifying expenditure on externally provided workers),

but for that purpose the references in those paragraphs to a company shall be read as references to the sub-contractor.”.