Expenditure on research and development directly undertaken on company’s behalfU.K.
5(1)The company’s qualifying expenditure on sub-contracted research and development is expenditure incurred by it where the following conditions are satisfied.
(2)The first condition is that the expenditure is incurred in making payments to—
(a)a qualifying body,
(b)an individual, or
(c)a partnership, each member of which is an individual,
in respect of research and development contracted out by the company to the body, individual or partnership concerned (“the sub-contracted R&D”).
(3)The second condition is that the sub-contracted research and development is directly undertaken on behalf of the company by the body, individual or partnership concerned.
(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 sub-contracted R&D is itself contracted out to the company, it is 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.