Corporation Tax Act 2009 section 1102

Qualifying expenditure on contracted out R&D

Section 1102 defines what counts as "qualifying expenditure on contracted out research and development" — that is, payments made to sub-contractors for R&D work.

• Payments to sub-contractors for R&D can qualify as contracted out R&D expenditure, provided certain conditions are met
• The sub-contractor element of any payment must be separately identified, as set out in sections 1134 to 1136
• The expenditure must be attributable to qualifying R&D activity, as defined in section 1101
• Capital expenditure is automatically excluded because a separate rule in section 53 (Part 3, trading income) already prevents deductions for capital spending