SCHEDULES

SCHEDULE 12Tax relief for expenditure on research and development

Part 1Entitlement to relief for R&D expenditure: large companies

4Qualifying expenditure on direct research and development

1

The company’s qualifying expenditure on direct research and development is expenditure incurred by it where the following conditions are satisfied.

2

The first condition is that the expenditure is incurred on research and development directly undertaken by the company.

F13

The second condition is that the expenditure—

a

is incurred on staffing costs,

b

is incurred on consumable stores, or

c

is qualifying expenditure on externally provided workers.

4

The third condition is that the expenditure is attributable to relevant research and development in relation to the company.

5

The fourth condition is that the expenditure is not of a capital nature.

6

The fifth condition is that, if the expenditure is incurred in carrying on activities contracted out to the company, they are contracted out—

a

by a large company, or

b

by any person otherwise than in the course of a trade, profession or vocation the profits of which are chargeable to tax under Case I or II of Schedule D.