Part 13Additional relief for expenditure on research and development

Chapter 6Chapters 2 to 5: further provision

1083Refunds of expenditure treated as income chargeable to tax

(1)

This section applies if a company receives a payment (“the refund”) refunding the whole or any part of expenditure—

(a)

to which subsection (2) applies, and

(b)

in respect of which the company obtains relief under Chapter 3, 4 or 5.

(2)

This subsection applies to—

(a)

qualifying Chapter 3 expenditure to which section 1067 applies (expenditure on sub-contracted R&D not undertaken in-house),

(b)

qualifying Chapter 4 expenditure (subsidised expenditure on R&D),

(c)

capped R&D expenditure, and

(d)

qualifying Chapter 5 expenditure which is—

(i)

qualifying expenditure on contracted out research and development under section 1078, or

(ii)

qualifying expenditure on contributions to independent research and development under section 1079.

(3)

30% of the refund is to be treated as income of the company chargeable to tax under Chapter 2 of Part 3 for the accounting period in which the refund is made.

(4)

But subsection (3) does not apply if, because of section 1080(4) (gross roll-up business), the relief obtained in respect of the expenditure concerned is an additional deduction in calculating for corporation tax purposes the profits of gross roll-up business of the company.

(5)

In that case 30% of the refund is to be treated as income which is—

(a)

referable to the gross roll-up business, and

(b)

chargeable, for the accounting period in which the refund is made, under the charge to corporation tax on income.