Finance Act 2008

Research and development

26 Rates of R&D relief and vaccine research relief

Schedule 8 contains provision about the rates of research and development relief and vaccine research relief.

27 Qualifying expenditure: R&D relief and vaccine research relief

(1) Paragraph 5 of Schedule 20 to FA 2000 (R&D tax relief: staffing costs) is amended as follows.

(2) In sub-paragraph (1)(b), after “company;” insert—

“(ba) the compulsory contributions paid by the company in respect of benefits for directors or employees of the company under the social security legislation of an EEA State (other than the United Kingdom) or Switzerland;”.

(3) Before sub-paragraph (1A) insert—

“(1ZB) In sub-paragraph (1)(ba) “social security legislation” means legislation relating to any of the branches of social security listed in Article 3(1) of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the co-ordination of social security systems (as amended from time to time).”

(4) Schedule 13 to FA 2002 (vaccine research relief) is amended as follows.

(5) In paragraph 2 (qualifying expenditure)—

(a) in sub-paragraph (1)(a), at the end insert “or”,

(b) omit sub-paragraph (1)(c) (and the “or” before it), and

(c) omit sub-paragraph (4).

(6) In paragraph 6 (qualifying expenditure on sub-contracted research and development), omit—

(a) in sub-paragraph (1), the second sentence, and

(b) sub-paragraph (3) (expenditure on research sub-contracted to a charity, a university or a scientific research organisation).

(7) Omit paragraph 12 (qualifying expenditure on contributions to independent research and development).

(8) Omit paragraph 25 (refunds of qualifying expenditure on contributions to independent research and development).

(9) Accordingly, in paragraph 3 of Schedule 8 to this Act (changes to rates of vaccine research relief), omit sub-paragraphs (2)(e) and (3)(d).

(10) The amendments made by this section have effect in relation to expenditure incurred on or after such day as the Treasury may by order appoint.

(11) Paragraph 10(4) of Schedule 13 to FA 2002 (time limit for giving notice of election for connected persons treatment) does not apply to a notice of an election under that paragraph in relation to sub-contractor payments if—

(a) the sub-contractor falls within paragraph 6(3) of that Schedule (repealed by this section) (charity, university or scientific research organisation), and

(b) the notice is given before the end of the period of 12 months beginning with the day appointed under subsection (10).

28 Companies in difficulty: SME R&D relief and vaccine research relief

Schedule 9 contains provision preventing a company from claiming research and development relief and vaccine research relief if it is not a going concern.

29 Cap on R&D aid

(1) A company is only entitled to R&D relief in respect of expenditure attributable to a research and development project if, or to the extent that, at that time, the total R&D aid in respect of expenditure by the company attributable to the project would not exceed 7.5 million euros.

(2) In subsection (1)—

• “R&D relief” means any relief or tax credit under—

  (a)

  Schedule 20 to FA 2000 (tax relief for expenditure by SMEs on research and development), or

  (b)

  Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research etc), and

• “total R&D aid” means the total R&D aid calculated—

  (a)

  in accordance with Part 1 of Schedule 10, and

  (b)

  as if a claim or election had been made for the R&D relief mentioned in subsection (1).

(3) The Treasury may by regulations—

(a) increase the amount specified in subsection (1), and

(b) amend Part 1 of Schedule 10.

(4) Part 2 of Schedule 10 contains amendments consequential on this section.

(5) Subsections (1) to (4) and that Schedule come into force on such day as the Treasury may by order appoint.

30 Vaccine research relief: declaration about effect of relief

(1) In paragraph 21 of Schedule 13 to FA 2002 (tax relief for expenditure by large companies on vaccine research etc), after sub-paragraph (3) insert—

“(3A) A claim under this paragraph must include a declaration that the availability of the relief claimed has resulted in an increase in—

(a) the amount, scope or speed of the research and development undertaken by the company, or

(b) the company’s expenditure on research and development.”

(2) The amendment made by subsection (1) has effect in relation to claims made on or after such day as the Treasury may by order appoint.