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HMRC internal manual

Corporate Intangibles Research and Development Manual

R&D tax relief: SME scheme: conditions

Operation of the scheme

In order to qualify for relief under the SME scheme the claimant company must be an SME (CIRD91000).

The conditions that must be satisfied are dealt with at CIRD81000 onwards. Some conditions are specific to the SME scheme. These are:


  1. Intellectual property resulting from the R&D must vest in the company. This condition is abolished for accounting periods ending on or after 9 December 2009 (CIRD81550).
  2. The company must not be in receipt of a notified state aid in respect of the project (CIRD81670).
  3. Expenditure must not be subsidised (CIRD81650).
  4. The company must not have been contracted to carry out the R&D (CIRD81470).
  5. The company must be a going concern (CIRD81130).
  6. The R&D project must not receive total aid of more than €7.5m (CIRD81160)

Alternative claims under large company scheme or RDEC

An SME may be able to claim under the large company scheme (CIRD88500) or RDEC (CIRD89740) if an SME scheme claim would fail only because of a condition in one of points 2, 3, 4 or 6 above.

Categories of qualifying expenditure

The categories within which expenditure must fall in order to be qualifying expenditure are dealt with at CIRD82000. The effect of subsidies on expenditure is dealt with at CIRD81650.