Section 1175 — Corporation Tax Act 2009: Connected sub-contractors

Connected sub-contractors 1175 1 This section applies if—

a a company makes a sub-contractor payment, b the company and the sub-contractor are connected, and c in accordance with generally accepted accounting practice, the whole of the sub-contractor payment and all of the sub-contractor's relevant expenditure have been brought into account in determining the sub-contractor's profit or loss for a relevant period. 1A In this section, a “ sub-contractor payment ” means a payment made by the company to the sub-contractor in respect of relevant land remediation contracted out by the company to the sub-contractor.

2 The amount of the sub-contractor payment which is “qualifying expenditure on connected sub-contracted land remediation ” for the purposes of section 1144(5) is—

a the entire payment, or b if less, an amount equal to the sub-contractor's relevant expenditure. 3 “ Relevant expenditure ” of the sub-contractor means expenditure that—

a is incurred by the sub-contractor in carrying on or arranging for carrying on , on behalf of the company, the activities to which the sub-contractor payment relates, b is not of a capital nature, c is in respect of staffing costs or materials, and d is not subsidised. 4 “ Relevant period ” means a period—

a for which accounts are drawn up for the sub-contractor, and b that ends not more than 12 months after the end of the company's period of account in which the sub-contractor payment is, in accordance with generally accepted accounting practice, brought into account in determining the company's profit or loss.

5 In the following sections, which apply for the purpose of determining whether a sub-contractor's expenditure meets the requirements of subsection (3)(c) and (d)—

a section 1170 (staffing costs),

and b section 1177 (subsidised expenditure), references to a company are to be read as references to the sub-contractor.

6 Any apportionment of expenditure of the company or the sub-contractor necessary for the purposes of this section is to be made on a just and reasonable basis.