Could recruitment fees could be treated as qualifying costs for SME R&D relief scheme as a subcontracted cost. I appreciate that the standard response to this question is no, but I can't see why it wouldn't be allowed from a principles perspective and would appreciate people on this forum sharing their thoughts.
It is clear that the activities of recruiting can be treated as qualifying as set out in an example listed in CIRD83000 (https://www.google.com/search?q=CIRD83000&rlz=1C1CHBF_en-GBGB855GB855&oq=CIRD83000&aqs=chrome..69i57j69i60.703j0j7&sourceid=chrome&ie=UTF-8) Specifically, the time that DR X spends recruiting scientists is treated as a qualifying activity.
If some of these recruitment activities are outsourced to external recruitment agencies for a fee, then does the external recruitment agencies fee qualify as a subcontractor expense? e.g.
A company undertaking qualifying R&D needs to hire a new head of R&D as a permanent employee on PAYE. They agree to pay a recruitment agency a fee of 25% of the first-year salary of the Head of R&D. The Recruitment agency headhunts and interviews prospective candidates based on their instructions from the company undertaking R&D, before shortlisting candidates. The company hires one of the candidates and pays £20,000 in fees.
Based on this example, it seems that the £20,000 fees should qualify for R&D relief as a subcontractor fee.Specifically, the recruitment agency has undertaken tasks on behalf of the company undertaking R&D. It is free to undertake the tasks in a way it wants, but will be overseen by the company undertaking R&D. The recruitment activities it is undertaking, are qualifying activities themselves.