Part 4: Income tax, corporation tax and capital gains tax Section 31: R&D expenditure credits: ineligible companies Background note
The government introduced the RDEC in 2013 to encourage more research and development by large companies. By making the RDEC available to all large companies, including those with no liability to corporation tax, it was intended to make the benefits of R&D tax relief more visible and certain, compared to the previous large company super deduction.
	The underlying rules for identifying qualifying activity and calculating qualifying expenditure remained unchanged.
	The RDEC scheme also provides for claims by Small and Medium Enterprises (SMEs), in a similar way that SMEs are able to make claims to the large company super deduction, in circumstances where the more generous SME R&D tax relief is unavailable. This includes SME claims to the RDEC in sub-contracting situations, and where an SME receives a subsidy for its R&D expenditure.
	The government's intention has always been that the RDEC be available only to commercial companies. HMRC has recently become aware that universities have made claims to the RDEC. Such claims were not an intended outcome of the introduction of the RDEC.
	In order to put the matter beyond doubt, and to ensure that the RDEC remains a well-targeted incentive to R&D in commercial companies, this section explicitly excludes universities and other charities.