|
| |
|
| |
(1) | In section 1114 “the tax credits” means the total R&D tax credits that have been |
| |
paid to the claimant under Chapter 2 or 7 in respect of expenditure attributable |
| |
to the research and development project. |
| |
(2) | An R&D tax credit that has been claimed but not paid or applied is treated for |
| 5 |
the purposes of subsection (1) as if it had been paid. |
| |
(3) | Subsection (2) does not apply if the claimant has been informed by Her |
| |
Majesty’s Revenue and Customs that the R&D tax credit will not be paid or |
| |
| |
1116 | “The actual reduction in tax liability” |
| 10 |
(1) | In section 1114 “the actual reduction in tax liability” means the sum of— |
| |
(a) | amounts within subsection (2), and |
| |
(b) | amounts within subsection (3). |
| |
(2) | The amounts within this subsection are those by which the liability of the |
| |
claimant to pay corporation tax has been reduced in any accounting period in |
| 15 |
consequence of qualifying R&D relief in respect of expenditure attributable to |
| |
the research and development project. |
| |
(3) | The amounts within this subsection are those by which the liability of any other |
| |
company (“C”) to pay corporation tax has been reduced in any accounting |
| |
period in consequence of a surrendered loss. |
| 20 |
(4) | A “surrendered loss” means a loss which— |
| |
(a) | is surrendered to C by the claimant under section 402 of ICTA |
| |
(surrender of relief between members of groups and consortia), and |
| |
(b) | arises in consequence of qualifying R&D relief in respect of expenditure |
| |
attributable to the project. |
| 25 |
1117 | “The potential relief” |
| |
(1) | In section 1114 “the potential relief” means the total amount of any qualifying |
| |
R&D relief (other than an R&D tax credit)— |
| |
(a) | in respect of which the claimant has made a claim or election, but |
| |
(b) | which, as at the day on which the total R&D aid is calculated in |
| 30 |
accordance with section 1114, has not been brought into account by the |
| |
claimant or by any other company. |
| |
(2) | Qualifying R&D relief is not to be counted for the purposes of subsection (1) if |
| |
the claimant has been informed by Her Majesty’s Revenue and Customs that it |
| |
is not entitled to the relief. |
| 35 |
1118 | “The notional relief” |
| |
(1) | In section 1114 “the notional relief” means the total amount of relief that the |
| |
claimant could have claimed under Chapter 5 (relief for large companies) in |
| |
any accounting period in respect of qualifying expenditure attributable to the |
| |
research and development project if the claimant had been a large company |
| 40 |
| |
|
| |
|
| |
|
(2) | “Qualifying expenditure” means expenditure that, in the accounting period in |
| |
| |
(a) | qualifying Chapter 2 expenditure (see section 1051), or |
| |
(b) | qualifying Chapter 7 expenditure (see section 1098). |
| |
| 5 |
| |
| |
1119 | “Small or medium-sized enterprise” |
| |
(1) | In this Part “small or medium-sized enterprise” means a micro, small or |
| |
medium-sized enterprise as defined in Commission Recommendation (EC) No |
| 10 |
2003/361, but subject to the qualifications in section 1120. |
| |
(2) | The Treasury may by order amend this section or section 1120 to substitute a |
| |
different definition of “small or medium-sized enterprise” for the purposes of |
| |
| |
(3) | This section is subject to section 1081 (insurance companies to be treated as |
| 15 |
large companies for purposes of Chapters 2 to 5). |
| |
1120 | Qualifications to section 1119 |
| |
(1) | This section contains qualifications to the definition of small or medium-sized |
| |
enterprise in section 1119. |
| |
(2) | The qualifications are— |
| 20 |
| |
| In Article 2(1) of the Annex, the references to 250 persons, 50 million euros and |
| |
43 million euros are to be read as references to 500 persons, 100 million euros |
| |
and 86 millions euros (respectively). |
| |
| 25 |
| If each of conditions A to D is met, Article 4(2) of the Annex is to be disregarded |
| |
in determining whether a company (“C”) is within the definition of small or |
| |
medium-sized enterprise in section 1119 for an accounting period in which C |
| |
exceeds the employee limit or the financial limits. |
| |
(3) | Condition A is that C is a micro, small or medium-sized enterprise as defined |
| 30 |
in the Recommendation (or would be if the Annex were read as set out in |
| |
qualification 1), disregarding any partner enterprise or linked enterprise. |
| |
(4) | Condition B is that a partner enterprise or linked enterprise to which C is |
| |
related exceeds the employee limit or both of the financial limits, disregarding |
| |
the number of employees, the annual turnover and the annual balance sheet |
| 35 |
| |
(5) | Condition C is that the number of employees, annual turnover or annual |
| |
balance sheet total (as the case may be) of the partner enterprise or linked |
| |
enterprise to which C is related has been taken into account in determining |
| |
whether C exceeded the employee limit or the financial limits. |
| 40 |
|
| |
|
| |
|
(6) | Condition D is that, taken alone, C satisfies the employee limit and at least one |
| |
| |
| |
(a) | references to the Recommendation are to the Commission |
| |
Recommendation mentioned in section 1119(1), |
| 5 |
(b) | references to the Annex are to the Annex to the Recommendation, |
| |
(c) | references to the employee limit are to the limit on the number of |
| |
employees contained in Article 2(1) of the Annex (read as set out in |
| |
| |
(d) | references to the financial limits are to the limits on the annual turnover |
| 10 |
and balance sheet totals contained in Article 2(1) of the Annex (read as |
| |
set out in qualification 1). |
| |
| |
References in this Part to a “larger SME” are to a company which is a small or |
| |
medium-sized enterprise by virtue of qualification 1 in section 1120. |
| 15 |
| |
In this Part “large company” means a company that is not a small or medium- |
| |
| |
| |
| 20 |
(1) | For the purposes of this Part the staffing costs of a company are amounts to |
| |
which subsection (2), (3), (4), (5) or (7) applies. |
| |
(2) | This subsection applies to an amount paid by the company to a director or an |
| |
employee of the company which— |
| |
(a) | is earnings consisting of money, and |
| 25 |
(b) | is paid because of the director’s or employee’s employment. |
| |
(3) | This subsection applies to an amount paid by the company to a director or an |
| |
employee of the company, other than an amount paid in respect of benefits in |
| |
| |
(a) | the amount is paid in respect of expenses paid by the director or |
| 30 |
| |
(b) | the amount is paid because of the director’s or employee’s |
| |
| |
(4) | This subsection applies to secondary Class 1 national insurance contributions |
| |
| 35 |
(5) | This subsection applies to compulsory contributions paid by the company in |
| |
respect of benefits for directors or employees of the company under the social |
| |
security legislation of an EEA State (other than the United Kingdom) or |
| |
| |
(6) | In subsection (5) “social security legislation” means legislation relating to any |
| 40 |
of the branches of social security listed in Article 3(1) of Regulation (EC) No. |
| |
|
| |
|
| |
|
883/2004 of the European Parliament and of the Council on the co-ordination |
| |
of social security systems (as amended from time to time). |
| |
(7) | This subsection applies to contributions paid by the company to a pension |
| |
fund operated for the benefit of directors or employees of the company. |
| |
(8) | In subsection (7) “pension fund” means a scheme, fund or other arrangement |
| 5 |
established and maintained (whether in the United Kingdom or elsewhere) for |
| |
the purpose of providing pension benefits. |
| |
| For this purpose “scheme” includes a deed, agreement or series of agreements. |
| |
(9) | In subsection (8) “pension benefits” means pensions, retirement annuities, |
| |
allowances, lump sums, gratuities or other superannuation benefits (with or |
| 10 |
without subsidiary benefits). |
| |
1124 | Staffing costs: attributable expenditure |
| |
(1) | This section applies for the purposes of this Part to identify when staffing costs |
| |
are attributable to relevant research and development. |
| |
(2) | The costs which are so attributable are those paid to, or in respect of, directors |
| 15 |
or employees who are directly and actively engaged in relevant research and |
| |
| |
(3) | Subsection (4) applies if a director or employee is partly engaged directly and |
| |
actively in relevant research and development. |
| |
(4) | The appropriate proportion of the staffing costs relating to the director or |
| 20 |
employee is treated as attributable to relevant research and development. |
| |
(5) | Subsection (6) applies if persons provide services, such as secretarial or |
| |
administrative services, in support of activities carried on by others. |
| |
(6) | Those persons are not, as a result of providing those services, to be treated as |
| |
themselves directly and actively engaged in those activities. |
| 25 |
Software or consumable items |
| |
1125 | “Software or consumable items” |
| |
(1) | For the purposes of this Part expenditure on software or consumable items |
| |
| |
(a) | computer software, or |
| 30 |
(b) | consumable or transformable materials. |
| |
(2) | For the purposes of subsection (1)(b) consumable or transformable materials |
| |
include water, fuel and power. |
| |
1126 | Software or consumable items: attributable expenditure |
| |
(1) | This section applies for the purposes of this Part to identify when expenditure |
| 35 |
on software or consumable items is attributable to relevant research and |
| |
| |
(2) | Expenditure on software or consumable items is so attributable if the software |
| |
or consumable items are employed directly in relevant research and |
| |
| 40 |
|
| |
|
| |
|
(3) | Subsection (4) applies if software or consumable items are partly employed |
| |
directly in relevant research and development. |
| |
(4) | The appropriate proportion of the expenditure on the software or consumable |
| |
items is treated as attributable to relevant research and development. |
| |
(5) | Subsection (6) applies if software or consumable items are employed in the |
| 5 |
provision of services, such as secretarial or administrative services, in support |
| |
| |
(6) | The software or consumable items are not, as a result of their employment in |
| |
the provision of those services, to be treated as themselves directly employed |
| |
| 10 |
Qualifying expenditure on externally provided workers |
| |
1127 | “Qualifying expenditure on externally provided workers” |
| |
(1) | For the purposes of this Part a company incurs expenditure on externally |
| |
| |
(a) | it makes a payment (a “staff provision payment”) to another person (the |
| 15 |
| |
(b) | the payment is in respect of the supply to the company, by or through |
| |
the staff provider, of the services of any externally provided workers. |
| |
(2) | The company’s qualifying expenditure on externally provided workers is |
| |
determined in accordance with section 1129 or 1131. |
| 20 |
(3) | In sections 1128 to 1131 references to “staff provider” and “staff provision |
| |
payment” are to be read in accordance with subsection (1). |
| |
1128 | “Externally provided worker” |
| |
(1) | For the purposes of this Part a person is an “externally provided worker” in |
| |
relation to a company if each of conditions A to G is met. |
| 25 |
(2) | Condition A is that the worker is an individual. |
| |
(3) | Condition B is that the worker is not a director or employee of the company. |
| |
(4) | Condition C is that the worker personally provides, or is under an obligation |
| |
personally to provide, services to the company. |
| |
(5) | Condition D is that the worker is subject to (or to the right of) supervision, |
| 30 |
direction or control by the company as to the manner in which those services |
| |
| |
(6) | Condition E is that the worker’s services are supplied to the company through |
| |
a staff provider (whether or not the worker is a director or employee of the staff |
| |
provider or any other person). |
| 35 |
(7) | Condition F is that the worker provides, or is under an obligation to provide, |
| |
those services personally to the company under the terms of a contract between |
| |
the worker and the staff provider. |
| |
(8) | Condition G is that the provision of those services does not constitute the |
| |
carrying on of activities contracted out by the company. |
| 40 |
|
| |
|