9(1)For the purposes of paragraph 8 the “relevant expenditure” of the sub-contractor is expenditure that—
(a)is incurred by the sub-contractor in carrying on, on behalf of the principal, the activities to which the sub-contractor payment relates, and
(b)satisfies the following conditions.
(2)The first condition is that the expenditure is not of a capital nature as regards the sub-contractor.
[F1(3)The second condition is that the expenditure—
(a)is incurred on staffing costs,
(b)is incurred on [F2software or consumable items] , or
(c)is qualifying expenditure on externally provided workers.
In applying for the purposes of this sub-paragraph (by virtue of paragraph 5 above)—paragraph 5 of Schedule 20 to the Finance Act 2000 (meaning of “staffing costs”), or paragraphs 8A to 8E of that Schedule (qualifying expenditure on externally provided workers), the references to the company shall be read as references to the sub-contractor.]
(4)The third condition is that the expenditure is not subsidised.
In applying (by virtue of paragraph 5 above) paragraph 8 of that Schedule (subsidised expenditure) for the purposes of this paragraph, the references to the company shall be read as references to the sub-contractor.
Textual Amendments
F1Sch. 13 para. 9(3) substituted (with effect in accordance with s. 168(3)(a) of the amending Act) by Finance Act 2003 (c. 14), Sch. 31 para. 24
F2Words in Sch. 13 substituted (with effect in accordance with s. 141(3)-(7)) by Finance Act 2004 (c. 12), s. 141(2)(c); S.I. 2005/123, art. 2