Corporation Tax Act 2009

Scientific research

87Expenses of research and development

(1)If a company carrying on a trade incurs expenses of a revenue nature on research and development—

(a)related to the trade, and

(b)directly undertaken by or on behalf of the company,

a deduction is allowed for the expenses in calculating the profits of the trade.

(2)For this purpose expenses incurred on research and development—

(a)do not include expenses incurred in the acquisition of rights in, or arising out of, research and development, but

(b)subject to that, include all expenses incurred in carrying out, or providing facilities for carrying out, research and development.

(3)The reference in this section to research and development related to a trade includes—

(a)research and development which may lead to or facilitate an extension of the trade, and

(b)research and development of a medical nature which has a special relation to the welfare of workers employed in the trade.

(4)The same expenses may not be brought into account under this section in relation to more than one trade.

(5)In this section “research and development” has the meaning given by section 837A of ICTA and includes oil and gas exploration and appraisal.

88Payments to research associations, universities etc

(1)If a company carrying on a trade—

(a)pays any sum to an Association in the case of which exemption may be claimed under section 508 of ICTA and which has as its object the undertaking of research and development which may lead to or facilitate an extension of the appropriate class of trade, or

(b)pays to an approved university, college, research institute or other similar institution any sum to be used for scientific research related to the appropriate class of trade,

a deduction is allowed for the sum in calculating the profits of the trade.

(2)The deduction is allowed for the accounting period in which the payment is made.

(3)In this section—

(a)“the appropriate class of trade” means the class of trade to which the trade carried on by the company belongs, and

(b)“scientific research” means any activities in the fields of natural or applied science for the extension of knowledge.

(4)For the purposes of this section a university, college research institute or other similar institution is approved if it is for the time being approved for the purposes of this section by the Secretary of State.

(5)The reference in subsection (1)(b) to scientific research related to the appropriate class of trade includes—

(a)scientific research which may lead to or facilitate an extension of trades of the appropriate class, and

(b)scientific research of a medical nature which has a special relation to the welfare of workers employed in trades of the appropriate class.

(6)If a question arises as to—

(a)whether, or

(b)to what extent,

any activities constitute or constituted scientific research, an officer of Revenue and Customs must refer the question for decision to the Secretary of State, whose decision is final.

(7)The same expenses may not be brought into account under this section in relation to more than one trade.