Commentary

D1.402A Qualifying conditions for R&D tax relief

Corporate tax
Corporate tax | Commentary

D1.402A Qualifying conditions for R&D tax relief

Corporate tax | Commentary

Qualifying conditions and definition of R&D for tax relief

D1.402A Qualifying conditions for R&D tax relief

For the latest New Development, see ND.1918.

There are certain qualifying conditions under both the SME and large R&D tax relief regimes.

Only a company can claim enhanced R&D tax relief1. The company is entitled to relief for an accounting period if it has qualifying R&D expenditure which is allowable as a deduction in calculating the profits of the trade for the purposes of corporation tax. Therefore relief is only available if the company is subject to corporation tax2.

An overseas permanent establishment of a UK company can qualify for relief as long as the permanent establishment is within the charge to corporation tax and the R&D is relevant to a trade within the charge to corporation tax. This principle also applies to UK permanent establishments of foreign companies, but with the necessary modifications3. Where companies carry out R&D in a joint venture, the company bears its own expenditure and the treatment is the same as if the expenditure had not been incurred in a joint venture4. A company that is a member of a partnership can obtain R&D relief5.

For a review of the options available to overseas companies to claim R&D tax relief see 'Genuine proposal' by David Ward and Peter Courtney in Taxation, 20 February 2020, 12.

A company not within the charge to corporation tax which

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