Part 13Additional relief for expenditure on research and development
Chapter 2Relief for SMEs: cost of R&D incurred by SME
Qualifying expenditure
1051Qualifying Chapter 2 expenditure
For the purposes of this Part a company's “qualifying Chapter 2 expenditure” means—
a
its qualifying expenditure on in-house direct research and development (see section 1052), and
b
its qualifying expenditure on contracted out research and development (see section 1053).
1052Qualifying expenditure on in-house direct R&D
1
A company's “qualifying expenditure on in-house direct research and development” means expenditure incurred by it in relation to which each of F1conditions A, B, D and E is met.
2
Condition A is that the expenditure is—
a
incurred on staffing costs (see section 1123),
b
incurred on software or consumable items (see section 1125),
c
qualifying expenditure on externally provided workers (see section 1127), or
d
incurred on relevant payments to the subjects of a clinical trial (see section 1140).
3
Condition B is that the expenditure is attributable to relevant research and development undertaken by the company itself.
F24
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5
Condition D is that the expenditure is not incurred by the company in carrying on activities which are contracted out to the company by any person.
6
Condition E is that the expenditure is not subsidised (see section 1138).
7
See sections 1124, 1126 and 1132 for provision about when expenditure within subsection (2)(a), (b) or (c) is attributable to relevant research and development.
1053Qualifying expenditure on contracted out R&D
1
A company's “qualifying expenditure on contracted out research and development” means expenditure—
a
which is incurred by it in making the qualifying element of a sub-contractor payment (see sections 1134 to 1136), and
b
in relation to which each of F3conditions A, C and D is met.
2
Condition A is that the expenditure is attributable to relevant research and development undertaken on behalf of the company.
F43
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4
Condition C is that the expenditure is not incurred by the company in carrying on activities which are contracted out to the company by any person.
5
Condition D is that the expenditure is not subsidised (see section 1138).
6
See sections 1124, 1126 and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development.