The taxpayer's Irish affiliate ("Saga Ireland") was a member of an oil exploration syndicate whose operator ("B.P.") carried out exploration work under an operating agreement on behalf of the other members of the syndicate, including Saga Ireland. The taxpayer without the knowledge of the syndicate members agreed to provide all the funds required by Saga Ireland under the terms of the operating agreement in return for all petroleum "won" by Saga Ireland.
The payments made by the taxpayer to Saga Ireland did not constitute expenditures "directly undertaken by him or on his behalf" (s.91(1)(a), Capital Allowances Act 1986). "A close relationship between the claimant and the undertaking of the research is inherent in the language." It was noted that "on behalf of" denotes an agency relationship and that "undertaking the research" refers to "persons who have commissioned it, in a wide sense, i.e., without any direct contractual link as a necessary requirement".