Section 1045ZA — Corporation Tax Act 2009: R&D intensity condition

R&D intensity condition 1045ZA 1 This section determines whether a company meets the R&D intensity condition in an accounting period for the purposes of sections 1044 and 1045.

2 If the company is not connected with another company, the company meets the condition if its relevant R&D expenditure for the period amounts to at least 30% of its total relevant expenditure for the period.

3 If the company is connected with at least one other company, the company meets the condition if the connected companies’ relevant R&D expenditure for the period amounts to at least 30% of the connected companies’ total relevant expenditure for the period.

4 In subsection (3) , “ the connected companies ” refers to the company to which this section is being applied and each company with which it is connected; and the references to their expenditure are to the aggregate of each of their expenditures.

5 Expenditure forms part of a company’s total relevant expenditure for an accounting period if—

a in accordance with generally accepted accounting practice, it is brought into account in calculating the profits for the period of any trade carried on by the company, b it is expenditure in respect of which the company is, for the period, entitled to relief under section 1045, or c in reliance on section 1308(2) (expenditure brought into account in determining value of intangible asset allowable as a deduction), it is brought into account in calculating the company’s profits for the period for corporation tax purposes.

6 But—

a expenditure of a company is to be ignored for the purposes of subsection (5) if it consists of a payment, or other transfer of value, to another company with which the company is connected, and b where expenditure forms part of a company's total relevant expenditure by virtue of subsection (5) (c) , a deduction brought into account as mentioned in subsection (5) (a) is to be ignored for the purposes of that provision to the extent that a corresponding deduction for corporation tax purposes is prevented by section 1308(5).

7 Expenditure forms part of a company’s relevant R&D expenditure for an accounting period if—

a it forms part of the company’s total relevant expenditure for the period, or would do but for subsection (6) (a) , and b it is expenditure in respect of which the company would, assuming that it met the R&D intensity condition, be entitled to relief under this Chapter for the period.

8 For the purposes of this section in its application to an accounting period, a company is to be treated as connected with another company if it is connected with that company on any day within the period.