Section 1138A — Corporation Tax Act 2009: Externally provided workers and contractors: R&D undertaken abroad

Externally provided workers and contractors: R&D undertaken abroad 1138A 1 This section applies to research and development undertaken outside the United Kingdom if—

a the research and development is undertaken in the circumstances described in subsection (2), or b for the purposes of relief under Chapter 2 the research and development is undertaken, or contracted out, by a company whose registered office is in Northern Ireland.

2 The circumstances are that there are conditions necessary for the purposes of the research and development—

a that are not present in the United Kingdom, b that are present in the location in which the research and development is undertaken, and c that it would be wholly unreasonable for the company to replicate in the United Kingdom.

3 In subsection (2) “conditions”—

a includes—

i geographical, environmental or social conditions;

ii legal or regulatory requirements as a result of which the research and development may not be undertaken in the United Kingdom, but b does not include conditions so far as relating to—

i the cost of the research and development;

ii the availability of workers to carry out the research and development.

4 The Treasury may by regulations make provision specifying things that are not conditions for the purposes of subsection (2).

5 Subsection (1)(b) does not apply in relation to a company in respect of an accounting period if the company—

a has not, at any time during the accounting period, carried on a trade involving—

i trade in goods, or ii the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity, and b has notified an officer of Revenue and Customs in writing that it wishes to rely on the exception in section 1112J(4) (restriction of Chapter 2 relief for Northern Ireland companies).