Finance (No. 2) Act 2005

Chapter 2 U.K. Scientific research organisations

13 Corporation tax exemption for organisations U.K.

(1) Section 508 of ICTA (tax exemption for scientific research organisations) is amended as follows.

(2) In subsection (1) (Associations undertaking scientific research and approved by Secretary of State), for paragraph (a) substitute—

“(a) an Association has as its object the undertaking of research and development which may lead to or facilitate an extension of any class or classes of trade; and”.

(3) In that subsection, for “, be allowed in the case of the Association” substitute “ in relation to any accounting period, be allowed in the case of the Association for that accounting period ”.

(4) After that subsection insert—

“(1A) The Treasury may by regulations prescribe circumstances in which the conditions in subsection (1) above shall be deemed not to be complied with.

(1B) The Treasury may by regulations make provision specifying for the purposes of paragraph (a) of that subsection—

(a) what shall be deemed to be, or not to be, an Association,

(b) circumstances in which an Association shall be deemed to have, or not to have, the undertaking of research and development as its object,

(c) circumstances in which the undertaking of research and development shall be deemed to be, or not to be, capable of leading to or facilitating an extension of a class of trade, or

(d) what shall be deemed to be, or not to be, a class of trade.”

(5) For subsection (3) (meaning of “scientific research”) substitute—

“(3) Section 837A (meaning of “research and development”) applies for the purposes of subsection (1)(a) above.

(4) Regulations under subsection (3) of that section (power to prescribe activities which are, or are not, research and development) may make provision for the purposes of that section as it applies by virtue of subsection (3) of this section which is additional to, or different from, the provision made otherwise for the purposes of that section.”

(6) This section has effect in relation to accounting periods beginning on or after such day as the Treasury may by order made by statutory instrument appoint.

14 Income tax deduction for payments to organisations U.K.

(1) Section 88 of ITTOIA 2005 (income tax deduction for payments to research associations etc.) is amended as follows.

(2) In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “research” in paragraph (b) substitute—

“(a) pays any sum to an Association in the case of which exemption may be claimed under section 508 of ICTA and which has as its object the undertaking of research and development which may lead to or facilitate an extension of the class of trade to which the trade carried on by the person belongs, or

(b) pays any sum to be used for scientific research related to that class of trade”.

(3) In subsection (4), omit paragraph (a) (meaning of “approved” in relation to scientific research association).

(4) In subsection (5) (references to scientific research related to a class of trade), for “references in this section” substitute “ reference in subsection (1)(b) ”.

(5) This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).

15 Corporation tax deduction for payments to organisations U.K.

(1) Section 82B of ICTA (corporation tax deduction for payments to research associations etc.) is amended as follows.

(2) In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “above” in paragraph (b) substitute—

“(a) pays any sum to an Association in the case of which exemption may be claimed under section 508 and which has as its object the undertaking of research and development which may lead to or facilitate an extension of the class of trade to which the trade carried on by the company belongs, or

(b) pays any sum to be used for scientific research related to that class of trade”.

(3) In subsection (3) (reference to scientific research related to a class of trade), for “this section” substitute “ subsection (1)(b) above ”.

(4) This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).