CIRD85050 - R&D tax reliefs: large company scheme: overview

FA02 introduced R&D tax relief for large companies. The relief is available for qualifying R&D expenditure ( CIRD81500) incurred on or after 1 April 2002 provided the qualifying expenditure on R&D for that period is not less than the required minimum ( CIRD81600). The conditions to be satisfied are dealt with at CIRD81000 and the categories of qualifying expenditure are dealt with at CIRD82000.

A company is a large company if it does not qualify as an SME ( CIRD91100 onwards). An SME can obtain relief under the large company scheme in certain circumstances ( CIRD88500).

Claims by an SME

Where an SME company is entitled to R&D tax relief for an accounting period under the large company scheme it can make a claim to deduct an extra 25%, or 30% for expenditure incurred on or after 1 April 2008, of its qualifying R&D expenditure for that accounting period when it calculates its trading profits. There is no option for a payable credit as there is within the SME scheme.

Features particular to the large company scheme

A large company cannot generally claim expenditure on subcontracted R&D as qualifying expenditure CIRD84200.

Subject to certain conditions, a large company can claim payments made as contributions to independent research as qualifying expenditure CIRD82200.

For a large company there is no requirement that any intellectual property rights arising from the research are vested in the company claiming the R&D tax relief.

Under the large company scheme any subsidies received are not deducted from the qualifying R&D expenditure CIRD89000.

There are provisions for the recovery of relief where a company receives a refund of some qualifying R&D expenditure ( CIRD87500).