C1Part 3Trading income
F1CHAPTER 6ATrade profits: R&D expenditure credits
Pt. 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
Large companies: qualifying R&D expenditure
104KQualifying expenditure on contracted out R&D
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 and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development.
Pt. 3 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 4(1)