Corporation Tax Act 2009 section 1129

Qualifying expenditure on externally provided workers: connected persons

Section 1129 sets out how to calculate qualifying R&D expenditure on externally provided workers when the company, the staff provider, and any staff controller are all connected parties.

• Where all parties (company, staff provider, and staff controller) are connected, qualifying expenditure is capped at the lower of the staff provision payment or the total relevant expenditure of each staff controller
• Relevant expenditure means the staff controller's non-capital costs of providing the externally provided workers, limited to staffing costs and agency workers' remuneration attributable to qualifying earnings
• Both the staff provider and each staff controller must have properly accounted for the payment and their relevant expenditure in their accounts for a period ending no more than 12 months after the company's own accounting period
• The staff provision payment is taken before any deductions under off-payroll working (IR35) rules, and any necessary apportionment of expenditure must be made on a just and reasonable basis