The requirement in the definition of qualifying R&D activity that it be carried on “by it” (i.e.
the company) denotes that the activities must be carried on by the claimant company and
not by another person.

There are two situations where relief is available to a company that has not carried out all of the qualifying R&D itself:

1. A company which incurs expenditure in the carrying on by it of qualifying R&D and
pays a sum to a university or institute of higher education to carry out qualifying R&D
activities in a relevant Member State31 can claim relief. Relief will be restricted to 15%
of the expenditure incurred by the company itself on R&D activities or €100,000,
whichever is the greater, subject to the company incurring at least the same level of
expenditure on qualifying activity which it carries out itself. For accounting periods
ending before 22 December 2019 this relief is restricted to 5%

2. A company which incurs expenditure in the carrying on by it of qualifying R&D and
pays a sum to another person (not to a university or institute) who is not a connected
person, in order for that person to carry out qualifying R&D activities for the
company, can claim relief. Relief will be restricted to 15% of the expenditure incurred
by the company itself on qualifying R&D activities or €100,000, whichever is the
greater, subject to the company incurring at least the same level of expenditure on
qualifying activity which it carries out itself. This provision applies to accounting
periods commencing on or after 1 January 2014, for accounting periods ending prior to
this date, this relief is restricted to 10% of the expenditure incurred by the company in
the carrying on by it of qualifying R&D activity.

• The limits set out in 1 and 2 above (to pay a university or institute of higher education and to
  pay a sub-contractor) are applied separately, these amounts are limited by reference to the
  company incurring at least the same level of expenditure on qualifying activities.
• It is important to note that the outsourced activity must constitute qualifying R&D activity of
  the company which appointed the sub-contractor, and not necessarily R&D of the subcontractor.
• In order to claim the credit for these costs, the company must notify the sub-contracting
  party in writing that they may not make a claim for the R&D credit for these purposes.

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