CIRD97150 - R&D tax relief: avoidance: specific statutory defences

FA00/SCH20/PARA21 and FA02/SCH12/PARA16

The wording of the above two paragraphs is very similar, although the large company provision does not have to include reference to payable credits under the SME scheme.

Where a transaction is attributable to arrangements entered into wholly or mainly with a purpose of gaining an R&D tax relief that would not otherwise be available, or of increasing the amount of deduction or the payable credit beyond what was otherwise available, then the transaction can be disregarded in determining the amount of any R&D tax relief or payable credit.

When these powers should not be used

These are potentially widely drawn provisions, and their use would not be considered in cases where a company had engaged in normal commercial arrangements to structure their affairs in order to obtain R&D relief within the intent of the legislation. Business Tax (Technical) should be consulted before the specific statutory powers are used.