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Ask an expert: R&D relief for software development

Question: Two companies have collaborated in the development of a software package. One company has spent £100k on developing the software and is just beginning to make the first sales under licence of the software. The software is new software in the area that it serves and is beginning to be used by relevant customers. Part of the software package development was subcontracted to another company which charges the developing company accordingly. Does the expenditure on development qualify for research and development relief and possibly also for the tax credit because of losses during the period of development? Within the developing company’s statutory accounts the costs of development have been written off creating losses that may be covered by future sales income.

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