Corporation Tax Act 2009 section 1082

R&D expenditure of group companies

Section 1082 deals with how research and development expenditure is allocated when R&D activities within a group of companies are carried out by certain group members on behalf of others.

• Where one group company undertakes R&D on behalf of another group company, the expenditure can be attributed to the company for whom the work is performed rather than the company actually carrying it out.
• This ensures that the correct group company is treated as incurring the R&D expenditure for tax purposes, even though the work is physically done by a different member of the group.
• The provision also extends to cover situations where R&D work is contracted out to third parties — so if a group company engages an external contractor to perform R&D, this is still brought within scope.
• The rules apply across the group to ensure that R&D tax reliefs and the associated expenditure are properly matched to the company that bears the economic cost of the research.