Corporation Tax Act 2009 section 1175

Connected sub-contractors

Section 1175 sets out how to calculate the qualifying land remediation expenditure when a company pays a connected sub-contractor to carry out contaminated land remediation work on its behalf.

• When a company outsources land remediation to a connected sub-contractor, the qualifying expenditure is capped at the lower of the actual payment made or the sub-contractor's own relevant expenditure on staffing costs and materials.
• The sub-contractor's relevant expenditure must be revenue (not capital) in nature, must relate to staffing costs or materials for the remediation work, and must not be subsidised.
• Both the sub-contractor payment and the sub-contractor's relevant expenditure must have been brought into account under generally accepted accounting practice within specified time limits.
• Where any allocation of costs between the company and the sub-contractor is needed, this must be done on a just and reasonable basis.