Other errors in claiming staff expenditure
- As highlighted above, it's essential there is a contract of employment between the R&D company and the employee being claimed for. Thus expenditure on consultants or agency workers does not qualify under this heading, although it may qualify as expenditure on payments to external staff providers or sub-contracted R&D.
- The staff claimed for must be directly and actively engaged in the R&D which means expenditure on staff engaged in activities described in the DTI R&D guidelines as 'qualifying indirect activities' does not qualify.
The way in which a company engages firms or people, other than employees, for an R&D project can affect whether the expenditure can qualify for R&D relief. The table below briefly summarises the position.
| Source | Definition | Claim |
|---|---|---|
| Sub-contracted activities | Where there is a contract for R&D activities to be carried out by another person | For the SME scheme: Yes, for 65% of the payment unless the company
and the sub-contractor are connected, or jointly elect for connected
parties treatment, in which case special rules apply. For claims under the large companies scheme: only expenditure on activities directly undertaken on the company's behalf by a restricted class of persons can qualify |
| Consultant | A contract to provide services rather than to undertake a specific part of the activities is not generally sub-contracted R&D or the provision of externally provided workers | No |
| Agency workers | As defined at CIRD84100 | Yes, from 27 September 2003 for SME's (from 9 April 2003 for large company relief). The amount that can be claimed is as for sub-contracted activities |
| Employees from other group companies | As defined at CIRD84100 | From 27 September 2003 for SME's (and from 9 April 2003 for large companies). Only the actual qualifying expenditure may be claimed |
