Corporation Tax Act 2009 section 1136

Qualifying element of sub-contractor payment: other cases

Section 1136 determines the qualifying element of a sub-contractor payment where the company and the sub-contractor are not connected persons (or where no election has been made to treat them as connected).

• This section applies to sub-contractor payments where the connected persons rule in section 1134 does not apply
• The qualifying element is 65% of the relevant portion of the payment
• The relevant portion covers research and development undertaken in the United Kingdom, or research and development undertaken outside the United Kingdom where the overseas R&D provision in section 1138A applies
• Any apportionment of expenditure needed for this purpose must be made on a just and reasonable basis