SCHEDULES
SCHEDULE 12Tax relief for expenditure on research and development
Part 1Entitlement to relief for R&D expenditure: large companies
5Expenditure on research and development directly undertaken on company’s behalf
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.