Corporation Tax Act 2009

Tax credit: entitlement and payment U.K.

1054 Entitlement to and payment of tax credit U.K.

(1) A company is entitled to an R&D tax credit for an accounting period if it has a Chapter 2 surrenderable loss in the period (see section 1055).

(2) For the company to obtain an R&D tax credit in respect of all or part of the Chapter 2 surrenderable loss it must make a claim [F1 (see Part 9A of Schedule 18 to the FA 1998, and also sections 1054A and 1112F)].

F2 ...

(3) The amount of an R&D tax credit to which the company is entitled is determined in accordance with section 1058.

(4) If a company makes a claim for an R&D tax credit to which it is entitled for an accounting period, an officer of Revenue and Customs must pay to the company the amount of the credit.

This is subject to section [F3 1112H].

F4 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) See also section 1062, which restricts the carry forward of losses where a company claims an R&D tax credit.

Textual Amendments

F1 Words in s. 1054(2) inserted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(10)(a)(i), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2

F2 Words in s. 1054(2) omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 6(10)(a)(ii), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2

F3 Word in s. 1054(4) substituted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(10)(b), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2

F4 S. 1054(5) omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 6(10)(c), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2

[F5 1054A Requirement to make a claim notification U.K.

(1) A company may not make a claim under section 1054(2) (an “R&D tax credit claim”) after the end of the claim notification period unless—

(a) the company has made an R&D claim during the period of three years ending with the last day of the claim notification period,

(b) the company makes a claim notification in respect of the R&D tax credit claim within the claim notification period, or

(c) the accounting period in respect of which the R&D tax credit claim is made falls within the same period of account as another accounting period in respect of which the company has made an R&D claim or a claim notification.

(2) For the purposes of subsection (1)(a) ignore any R&D claim for an accounting period beginning before 1 April 2023 that is included in the company’s company tax return only by virtue of an amendment made on or after that date (see paragraph 83B(2) of Schedule 18 to FA 1998).]

Textual Amendments

F5 S. 1054A inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 1 paras. 2(5), 20

1055 Meaning of “Chapter 2 surrenderable loss” U.K.

(1) For the purposes of this Chapter a company has a “Chapter 2 surrenderable loss” if in an accounting period—

(a) it obtains an additional deduction under section 1044 in calculating the profits of a trade and it makes a trading loss in that period in the trade, or

(b) it is treated as making a trading loss under section 1045.

(2) If relief is obtained under section 1044 the amount of the Chapter 2 surrenderable loss is—

(a) so much of the trading loss as is unrelieved, or

(b) if less, [F6 186%] of the qualifying Chapter 2 expenditure in respect of which the relief was obtained.

(3) If relief is obtained under section 1045 the amount of the Chapter 2 surrenderable loss is so much of the trading loss as is unrelieved.

Textual Amendments

F6 Word in s. 1055(2)(b) substituted (in relation to expenditure incurred on or after 1.4.2023) by Finance Act 2023 (c. 1), s. 4(3)(c)(4)

Modifications etc. (not altering text)

C1 S. 1055 excluded by 2010 c. 4, s. 357PC (as inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1)

1056 Amount of trading loss which is “unrelieved” U.K.

(1) This section applies for the purposes of section 1055.

(2) The amount of a trading loss that is “unrelieved” is the amount of the loss reduced by—

(a) any relief that was or could have been obtained by the company making a claim under [F7 section 37(3)(a) of CTA 2010 to deduct the loss from total] profits of the same accounting period,

(b) any other relief obtained by the company in respect of the loss, including relief under [F8 section 37(3)(b) or 42 of CTA 2010 (losses deducted from] profits of an earlier accounting period), and

(c) any loss surrendered under [F9 Part 5 [F10 or Part 5A] of CTA 2010] (surrender of relief to group or consortium members).

(3) No account is to be taken for this purpose of any losses—

(a) brought forward from an earlier accounting period under [F11 section 45[F12 , 45A or 45B] of CTA 2010], or

(b) carried back from a later accounting period under [F13 section 37(3)(b) or 42] of that Act.

Textual Amendments

F7 Words in s. 1056(2)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 669(2)(a) (with Sch. 2)

F8 Words in s. 1056(2)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 669(2)(b) (with Sch. 2)

F9 Words in s. 1056(2)(c) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 669(2)(c) (with Sch. 2)

F10 Words in s. 1056(2)(c) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 134(a)

F11 Words in s. 1056(3)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 669(3)(a) (with Sch. 2)

F12 Words in s. 1056(3)(a) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 134(b)

F13 Words in s. 1056(3)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 669(3)(b) (with Sch. 2)

Modifications etc. (not altering text)

C2 S. 1056 applied by 2010 c. 4, s. 357PC (as inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), s. 1)

F14 1057 Tax credit only available where company is going concern U.K.

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Textual Amendments

F14 S. 1057 omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 6(11), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2