Schedule 1 - Research and development

Finance Bill – in the House of Commons am 6:30 pm ar 5 Chwefror 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Amendments made: 1, page 42, line 12, at end insert—

“(5A) But—

(a) expenditure of a company is to be ignored for the purposes of subsection (5) if it consists of a payment, or other transfer of value, to another company with which the company is connected, and

(b) where expenditure forms part of a company's total relevant expenditure by virtue of subsection (5)(c), a deduction brought into account as mentioned in subsection (5)(a) is to be ignored for the purposes of that provision to the extent that a corresponding deduction for corporation tax purposes is prevented by section 1308(5).”

This amendment deals with two cases in which double-counting might otherwise arise in calculating a company’s, or an aggregate of connected companies’, total expenditure for the purpose of determining whether the R&D intensity threshold is met.

Amendment 2, page 42, line 16, after “period,” insert

“or would do but for subsection (5A)(a),”.

This amendment is consequential on Amendment 1.

Amendment 3, page 63, line 26, at end insert—

“Avoidance of overlaps and gaps in entitlement during transition

17A (1) Sub-paragraphs (2) and (3) apply if, but for those sub-paragraphs—

(a) one company (“company A”) would be entitled to old R&D relief, and

(b) another company (“company B”) would be entitled to new R&D relief,

in respect of expenditure attributable to the same research and development.

(2) If company B would have been entitled to old R&D relief in respect of its expenditure had the Part 1 amendments not been made, only company B is entitled to the relief.

(3) In any other case, only company A is entitled to the relief.

(4) Sub-paragraph (5) applies if—

(a) a company incurs pre-commencement expenditure,

(b) the company is not entitled to old R&D relief in respect of the expenditure, and

(c) had the expenditure been post-commencement expenditure, it would have been—

(i) qualifying Chapter 1A expenditure by virtue of section 1042E of CTA 2009 or section 1042F of that Act as it refers to section 1042E, or

(ii) qualifying Chapter 2 expenditure by virtue of section 1053 of CTA 2009 (as it has effect after the Part 1 amendments) or section 1053A of that Act as it refers to section 1053.

(5) The company is to be treated as satisfying sections 1042F(4) and 1053A(4) of CTA 2009 for the purposes of ascertaining the entitlement of another company to new R&D relief in respect of expenditure attributable to the same research and development as the expenditure mentioned in sub-paragraph (4).

(6) Sub-paragraph (7) applies if—

(a) in respect of pre-commencement expenditure attributable to research and development, one company (“company C”)—

(i) is not entitled to old R&D relief, but

(ii) would be so entitled if none of sections 104C(2), 104G(5), 104H(6), 104J(4), 104K(5), 104L(4), 1052(5) and 1053(4) of CTA 2009 (as they have effect before the Part 1 amendments) applied, and

(b) in respect of post-commencement expenditure attributable to the same research and development, another company (“company D”) would, had the expenditure been pre-commencement expenditure, have been entitled to old R&D relief by virtue of section 1053 of CTA 2009 (as it has effect before the Part 1 amendments).

(7) For the purpose of ascertaining the entitlement of company D to new R&D relief, the research and development is to be treated as contracted out by company D within the meaning of section 1133 of CTA 2009 (as it has effect after the Part 1 amendments).

(8) In this paragraph—

“the new R&D provisions” means Part 13 of CTA 2009 as it has effect after the Part 1 amendments;

“new R&D relief” means relief under the new R&D provisions;

“the old R&D provisions” means Chapter 6A of Part 3 or Part 13 of CTA 2009 as that Chapter or Part has effect before the Part 1 amendments;

“old R&D relief” means relief under the old R&D provisions;

“the Part 1 amendments” means the amendments made by Part 1 of this Schedule;

“post-commencement expenditure” means expenditure incurred in an accounting period beginning on or after the appointed day;

“pre-commencement expenditure” means expenditure incurred in an accounting period beginning before the appointed day.”—(Nigel Huddleston.)

This amendment ensures that one, but only one, company can claim relief in certain transitional situations where more than one company is involved in the same R&D but not both or not all of them have become subject to the changes made by Part 1 of Schedule 1.