Corporation Tax Act 2010 section 357BLEA

Cases where the company is a party to a CSA

Section 357BLEA addresses how a company's R&D expenditure under a cost-sharing arrangement (CSA) should be adjusted when calculating the R&D fraction, by offsetting payments made against payments received under the arrangement.

• Where a company makes payments under a CSA that count as subcontracted R&D expenditure to unconnected persons, those costs can be offset against payments received from unconnected CSA members for R&D the company itself performs or subcontracts out.
• The amount of expenditure equal to the offsetting receipts is disregarded when calculating the R&D fraction for the relevant sub-stream.
• A similar offset applies where CSA payments are treated as R&D subcontracted to connected persons, or as expenditure on acquiring or licensing qualifying IP rights — these can be offset against receipts from connected persons for the company's own R&D, or payments relating to IP rights assigned or licensed to the company.
• In both cases, the effect is to ensure that only the net cost borne by the company — after deducting contributions received from other CSA parties — feeds into the R&D fraction calculation.