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

Qualifying sub-contracted R&D expenditure

8

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.