Amendment 1 to Schedule 1: Avoidance of double-claiming and gaps in entitlement during transition
Published 29 January 2024
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Summary
- This amendment removes scope for double claiming and ensures availability of relief to a party in certain situations where qualifying R&D work is done under a contract between a customer and a contractor, and relief would otherwise not be available to either party. These are transitional provisions which will apply where one party has moved to the new rules and the other is within the old rules due to overlapping accounting periods.
Details of the amendment
2. The amendment inserts a new paragraph 17A into Schedule 1.
3. Subsection 1 of the new paragraph applies subsections 2 and 3 in a case where two claims, one by a company (A) for old R&D relief, and one by another company (B) for new R&D relief, would otherwise be possible in respect of expenditure attributable to the same research and development.
4. Subsection 2 provides that, where a company (B) is eligible for new R&D relief, and would have been entitled to old R&D relief for the same expenditure had the changes made by Schedule 1 not been made, it and only it can claim.
5. Subsection 3 provides that in any other case, only the company that is eligible for old R&D relief (A) can claim.
6. Subsections 4 and 5 ensure that, in a situation where R&D work is done under a contract between a customer and a contractor, and the customer incurs pre-commencement expenditure in respect of which it is not entitled to old R&D relief, but in respect of which it would have been entitled to new R&D relief had the expenditure been incurred in an accounting period beginning on or after 1 April 2024, the contractor is not prevented from claiming new R&D relief on the R&D contracted out to it by the customer.
7. Subsections 6 and 7 apply to a situation where, in respect of research and development, a company (C) has pre-commencement expenditure that would have been eligible for old R&D relief but for the fact that the research and development was contracted to it by a person who was not a large company or a person otherwise than in the course of carrying on a chargeable trade, and another company (D) has post-commencement expenditure in respect of the same research and development that would have been eligible for old R&D relief had it been pre-commencement expenditure. In such a case, D’s expenditure is treated as expenditure on R&D contracted out by it within the meaning of new s1133, eligible for new R&D relief.
8. Subsection 8 defines certain technical terms used in this paragraph.
Background note
9. This amendment removes scope for double claiming and ensures availability of relief to a party in certain situations where qualifying R&D work is done under a contract between a customer and a contractor and relief would otherwise not be available to either party. It ensures that the Autumn Finance Bill 2023 as laid before Parliament operates as intended.