CIRD81470 - R&D tax relief: conditions to be satisfied: subcontracted R&D

What is considered to be subcontracting is dealt with at CIRD84250.

FA00/SCH20/PARA3 (6) - SME scheme

One of the conditions for a company to make a claim under the SME scheme is that the expenditure is not incurred in carrying on R&D activities as a subcontractor.

In some cases the SME company may still be able to make a claim under the large company scheme (FA02/SCH12/PARA7 - 10) CIRD89500. This will entitle the company to a 25% deduction, (30% from 1 April 2008), for qualifying expenditure. Where a company has made a claim in respect of expenditure under the large company scheme then losses arising from that expenditure can not be surrendered for a payable tax credit (see CIRD90500).

FA02/SCH12/PARA4 (6) - large company scheme

Large companies that have been contracted to carry out R&D activities must have been contracted by either:

• a large company, or
• a person otherwise than in the course of a trade, profession or vocation the profits of which are chargeable to tax under Case I or II of Schedule D.