Corporation Tax Act 2009 section 104E

Expenditure on sub-contracted R&D not undertaken in-house

Section 104E defines the conditions that must be met for an SME company's expenditure on research and development that has been contracted out to another party to qualify for relief.

• This section applies specifically to small and medium-sized enterprises (SMEs) that contract out their R&D work rather than performing it in-house.
• Three conditions (A, B and C) must all be satisfied for the contracted-out R&D expenditure to qualify.
• The payments must be made to an eligible recipient — namely a qualifying body, an individual, or a firm whose members are individuals.
• The R&D must actually be carried out by the party receiving the payment and must relate to the company's own relevant research and development activities.