Part 13F1... expenditure on research and development
Chapter 2F2Relief for loss-making, R&D-intensive SMEs
Pt. 13 Ch. 2 heading substituted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(2), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2
Qualifying expenditure
1051Qualifying Chapter 2 expenditure
1052F3Qualifying expenditure: in-house R&D
1
Expenditure of a company is qualifying Chapter 2 expenditure if it meets each of conditions A to D in this section.
2
Condition A is that the expenditure is attributable to relevant research and development undertaken by the company itself.
3
Condition B is that the expenditure is—
a
incurred on staffing costs (see section 1123),
b
incurred on software, data licences, cloud computing services or consumable items (see section 1125),
c
qualifying expenditure on externally provided workers (see section 1127), or
d
incurred on relevant payments to the subjects of a clinical trial (see section 1140).
4
Condition C is that the research and development is not contracted out to the company (see section 1133).
5
Condition D is that the expenditure is not attributable to an exempt foreign permanent establishment (see section 1138B).
6
1053Qualifying expenditure: payments for contracted out R&D
1
Expenditure of a company is qualifying Chapter 2 expenditure if it meets each of conditions A to D in this section.
2
Condition A is that the expenditure is attributable to relevant research and development contracted out by the company (see section 1133).
3
Condition B is that the research and development is not also contracted out to the company (see section 1133).
4
Condition C is that the expenditure is incurred in making the qualifying element of a contractor payment (see sections 1133 to 1136).
5
Condition D is that the expenditure is not attributable to an exempt foreign permanent establishment (see section 1138B).
6
See sections 1124, 1126 to 1126B and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development.
1053AQualifying expenditure: activity as contractor for irrelievable client
1
Expenditure of a company is qualifying Chapter 2 expenditure if it meets conditions A, B and C in this section.
2
Condition A is that the expenditure is attributable to relevant research and development contracted out to the company (see section 1133).
3
Condition B is that subsection (4) is satisfied by each person by whom the research and development is contracted out to the company.
4
A person satisfies this subsection if—
a
the person is an ineligible company (see section 1142), or
b
the person is not, in relation to the contracting out of the research and development by that person, acting in the course of a trade, profession or vocation within the charge to tax.
Words in Pt. 13 heading omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 3, 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2