SCHEDULES

SCHEDULE 12Tax relief for expenditure on research and development

Part 2Entitlement to relief for R&D expenditure: work subcontracted to small or medium-sized enterprise

8Qualifying sub-contracted R&D expenditure

For the purposes of this Schedule, the SME’s “qualifying sub-contracted R&D expenditure” is the expenditure incurred by the SME on research and development that is contracted out to it where—

a

that research and development is contracted out to the SME—

i

by a large company, or

ii

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

b

the conditions of either paragraph 9 or paragraph 10 are satisfied.