Part 13F4... expenditure on research and development
Chapter 9Supplementary
Software F3, data licences, cloud computing services or consumable items
Words in s. 1125 cross-heading inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 1 paras. 3(2), 20
C11126AF1Attributable expenditure: special rules F2for consumable items
1
Expenditure on consumable items is not to be treated as attributable to relevant research and development if—
a
the relevant research and development relates to an item that is produced in the course of the research and development,
b
the consumable items form part of the item produced,
c
the item produced is transferred by a relevant person for consideration in money or money's worth, and
d
the transfer is made in the ordinary course of the relevant person's business.
2
Expenditure on consumable items is not to be treated as attributable to relevant research and development if—
a
the relevant research and development relates to a process of producing an item,
b
the consumable items form part of an item produced in the course of that research and development,
c
the item produced is transferred by a relevant person for consideration in money or money's worth, and
d
the transfer is made in the ordinary course of the relevant person's business.
3
If—
a
the item produced as described in subsection (1) or (2) may be divided, and
b
only a proportion (“the appropriate proportion”) of that item is transferred by a relevant person as described in subsection (1)(c) and (d) or (2)(c) and (d),
the appropriate proportion of the expenditure on the consumable items is not to be treated as attributable to the relevant research and development.
4
If—
a
a number of items are produced in the course of the relevant research and development described in subsection (2), and
b
only a proportion (“the appropriate proportion”) of those items is transferred by a relevant person as described in subsection (2)(c) and (d),
the appropriate proportion of the expenditure on the consumable items is not to be treated as attributable to the relevant research and development.
5
A reference in this section to producing an item includes a reference to preparing an item for transfer.
6
For the purposes of this section a consumable item forms part of an item produced if—
a
it is incorporated into the item produced, or
b
it is turned into, or it and other materials are turned into, the item produced or a part of the item produced.
7
A reference in this section to the transfer of an item is a reference to—
a
the transfer of ownership of an item to another person (whether by sale or otherwise), or
b
the transfer of possession of an item to another person (whether by letting on hire or otherwise),
and a reference to the transfer of an item includes, where the item is incorporated into another item, the transfer of that other item.
8
For the purposes of this section the provision of information obtained in testing an item is not to be regarded as consideration for the transfer of that item.
9
For the purposes of this section a transfer of an item produced in the course of research and development is not to be regarded as a transfer in the ordinary course of business if the item being transferred is waste.
10
In this section—
“item” includes any substance;
“relevant person”, in relation to relevant research and development, means—
- a
the company that incurs the cost of the research and development, whether it is undertaken by itself or contracted out,
- b
the company to which the research and development is contracted out, whether it is undertaken by itself or contracted out,
- c
the person (other than a company) who contracts out the research and development to a company and incurs the cost of the research and development,
- d
the person (other than a company) to whom the research and development is contracted out, or
- e
a person who is connected to a company or person described in paragraph (a), (b), (c) or (d).
- a
Words in Pt. 13 heading omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 3, 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2