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HMRC internal manual

Corporate Intangibles Research and Development Manual

From
HM Revenue & Customs
Updated
, see all updates

VRR: refunds of contributions and subcontract payments

FA02/SCH13/PARA25A company that has made payments for sub-contracted R&D

CIRD75400or made contributions to independent R&D CIRD75500 may receive a refund of all or part of the payment or contribution.

If it does treat the appropriate amount as Case I income.

There is one exception to this. If the company is an insurance company that has received relief by treating the payment or contribution as a deduction in calculating the profits chargeable to tax Case VI treat the appropriate amount as Case VI income.

For SMEs the appropriate amount is:

  • 50% of the refund where the payment qualified for R&D tax credits for SMEs, and
  • 150% of the refund in other cases.For large companies the appropriate amount is:

  • 50% of the refund where the payment could be deducted in computing trading profits, and
  • 150% of the refund in other cases.
  • For both SMEs and large companies the appropriate amount in respect of expenditure incurred on or after 1 August 2008 is 40% or 140% as appropriate.For both SMEs and large companies the appropriate amount in respect of expenditure incurred on or after 1 August 2008 is 40% or 140% as appropriate.