Corporation Tax Act 2009 section 1072

Subsidised qualifying expenditure on contracted out R&D

Section 1072 defines what counts as "subsidised qualifying expenditure on contracted out research and development" for the purposes of the R&D tax relief rules.

• This section applies where a company's qualifying expenditure on contracted out R&D has been subsidised — meaning another party has contributed to or funded the cost.
• Small or medium-sized enterprises (SMEs) cannot claim R&D relief for subsidised contributions to independent research and development — only large companies can claim relief for such expenditure under section 1079.
• The definition is important because subsidised expenditure is treated differently from unsubsidised expenditure, potentially restricting the amount of enhanced relief available.
• There is no separate requirement that the expenditure must be non-capital in nature, because the general rule in section 53 of Part 3 (trading income) already prevents any deduction for capital expenditure.