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HMRC internal manual

Corporate Intangibles Research and Development Manual

R&D tax reliefs: large company scheme: overview

FA02 introduced R&D tax relief for large companies. The relief is available for qualifying R&D expenditure (CIRD81500) incurred on or after 1 April 2002 provided the qualifying expenditure on R&D for that period is not less than the required minimum (CIRD81600). The conditions to be satisfied are dealt with at CIRD81000 and the categories of qualifying expenditure are dealt with at CIRD82000.

A company is a large company if it does not qualify as an SME (CIRD91100 onwards). A SME can obtain relief under the large company scheme in certain circumstances (CIRD88500).

Claims by a SME

Where a SME company is entitled to R&D tax relief for an accounting period under the large company scheme it can make a claim to deduct an extra 25%, or 30% for expenditure incurred on or after 1 April 2008, of its qualifying R&D expenditure for that accounting period when it calculates its trading profits. There is no option for a payable credit as there is within the SME scheme.

Features particular to the large company scheme

A large company cannot generally claim expenditure on subcontracted R&D as qualifying expenditure CIRD84200.

Subject to certain conditions, a large company can claim payments made as contributions to independent research as qualifying expenditure CIRD82200.

For a large company there is no requirement that any intellectual property rights arising from the research are vested in the company claiming the R&D tax relief.

Under the large company scheme any subsidies received are not deducted from the qualifying R&D expenditure CIRD89000.

There are provisions for the recovery of relief where a company receives a refund of some qualifying R&D expenditure (CIRD87500).