Collins Construction Ltd: Contracted out and subsidised R&D – take two

The First-tier Tribunal (FTT) case of Collins Construction Limited (TC9332) examined the definitions of contracted out and subsidised research and development (R&D) for small and medium-sized enterprises (SME) R&D tax relief.

The case relates to the SME scheme for accounting periods beginning before 1 April 2024 which was substantially more generous than the alternative relief (R&D expenditure credit). Alongside various other conditions companies could only access SME relief if the R&D activities claimed had not been contracted out to them by another party and the expenditure claimed had not been subsidised.

The issues of contracted out and subsidised R&D have created significant uncertainty within a previously relatively stable area of tax policy (at least until the recent period of reform). There is not space here to recount the full history but the Collins case does represent a notable milestone and will be of...