Corporation Tax Act 2009 section 1135

Election for connected persons treatment

Section 1135 allows a company and an unconnected sub-contractor to jointly elect to be treated as connected persons for the purpose of calculating the qualifying element of sub-contractor payments for R&D tax relief.

• A company and an unconnected sub-contractor may jointly elect to be treated as if they were connected, which affects how the qualifying element of sub-contractor payments is calculated under section 1134
• The election must cover all contractor payments made under the same contract — it cannot be applied selectively to individual payments
• The election must be made in writing to HMRC within two years after the end of the company's accounting period in which the contract was entered into
• Once made, the election is irrevocable and cannot be withdrawn or amended