(1) The Principal Act is amended -

(a) in Part 29 by inserting the following Chapter after Chapter 4:

"CHAPTER 5 Taxation of companies engaged in knowledge development

769G. Interpretation and general

(1) In this Chapter -

'accounting period' in relation to a company, means an accounting period determined in accordance with section 27;

'acquisition costs', in relation to expenditure incurred on a qualifying asset, means the expenditure incurred on the acquisition of intellectual property, or rights over intellectual property, where that intellectual property is reflected in the value of the qualifying asset, but where expenditure incurred on acquiring the intellectual property is incurred otherwise than by means of a bargain made at arm's length, that acquisition shall, for the purposes of this Chapter, be deemed to be for a consideration equal to the open market value of the intellectual property;

'group' means a company and all of its 51 per cent subsidiaries;

'group outsourcing costs', in relation to a qualifying asset, means any amount incurred in carrying on research and development activities which results in a qualifying asset, where that amount is not qualifying expenditure but would be qualifying expenditure on a qualifying asset -

(a) if the research and development activities were carried on in a Member State, or