Section 357BLH | R&D fraction: increase for exceptional circumstances

(1)The company may elect to increase the R&D fraction for the sub-stream by the amount mentioned in subsection (2) if (but for the increase)—

(a)it would not be less than 0.325, and

(b)it would, because of exceptional circumstances, be less than the value fraction for the sub-stream (see subsection (3)).

(2)The amount of the increase referred to in subsection (1) is the amount which is equal to the difference between the R&D fraction (before the increase) and the value fraction.

(3)The “value fraction” for the sub-stream is the fraction which, on a just and reasonable assessment, represents the proportion of the value of the relevant qualifying IP rights which is properly attributable to research and development undertaken at any time—

(a)by the company itself, or

(b)on behalf of the company by persons not connected with it.

(4)An election under subsection (1) is made by the company giving notice to an officer of Revenue and Customs.

(5)The notice must be given on or before the last day on which an amendment of the company's tax return for the accounting period could be made under paragraph 15 of Schedule 18 to FA 1998.

(6)In this section—

“relevant qualifying IP rights” has the same meaning as in section 357BLE, and

“research and development” has the meaning given by section 1138.

(7)Section 1122 (meaning of “connected” persons”) applies for the purposes of this section.