Section 1138A | Externally provided workers and contractors: R&D undertaken abroad

(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).