Office of Public Sector Information
Section 26
1 (1) Part 2 of Schedule 20 to FA 2000 (giving effect to R&D tax relief) is amended as follows.
(2) In each of the following provisions, for “150%” substitute “175%”—
(a) paragraph 13 (deduction in computing profits of trade),
(b) paragraph 14(2) (alternative treatment of pre-trading expenditure), and
(c) paragraph 15(3)(b) (entitlement to R&D tax credit).
(3) In paragraph 16(1)(a) (amount of R&D tax credit), for “16%” substitute “14%”.
(4) The amendments made by this paragraph have effect in relation to expenditure incurred on or after such day as the Treasury may by order appoint.
(5) The Treasury may appoint a day before the day on which this Act is passed, but not one before 1 April 2008.
2 (1) In Schedule 12 to FA 2002 (tax relief for expenditure on research and development), in both of the following provisions, for “25%” substitute “30%”—
(a) paragraph 11(2) (deduction in computing profits of trade), and
(b) paragraph 15(4) (refunds of contributions to independent research and development etc).
(2) The amendments made by sub-paragraph (1) have effect in relation to expenditure incurred on or after 1 April 2008.
3 (1) Schedule 13 to FA 2002 (vaccine research relief) is amended as follows.
(2) In each of the following provisions, for “50%” substitute “40%”—
(a) paragraph 14(2) (deduction in computing profits of trade: small and medium-sized companies),
(b) paragraph 15(2)(a) (alternative treatment of pre-trading expenditure: deemed trading loss),
(c) paragraph 15A(2) (modifications for larger SMEs claiming R&D tax credits),
(d) paragraph 21(2) (deduction in computing profits of trade: large companies), and
(e) paragraph 25(4)(a)(i) and (b)(i) (refunds of contributions to independent research and development).
(3) In each of the following provisions, for “150%” substitute “140%”—
(a) paragraph 15(2)(b) (alternative treatment of pre-trading expenditure: deemed trading loss),
(b) paragraph 16A(1) (entitlement to tax credit: modifications for larger SMEs),
(c) paragraph 21(3) (deduction in computing profits of trade: large companies), and
(d) paragraph 25(4)(a)(ii) and (b)(ii) (refunds of contributions to independent research and development).
(4) The amendments made by this paragraph have effect in relation to expenditure incurred on or after such day as the Treasury may by order appoint.
(5) The Treasury may appoint a day before the day on which this Act is passed, but not one before 1 April 2008.
Section 28
1 (1) Schedule 20 to FA 2000 (tax relief for expenditure on research and development) is amended as follows.
(2) In paragraph 13 (deduction in computing profits of trade), insert at the end “(subject to paragraph 18A)”.
(3) In paragraph 14(2) (alternative treatment of pre-trading expenditure), insert at the end “(subject to paragraph 18A)”.
(4) In paragraph 15(1) (entitlement to R&D tax credit), insert at the end “(subject to paragraph 18A)”.
(5) In paragraph 18 (payment in respect of R&D tax credit), insert at the end—
“(5) This paragraph has effect subject to paragraph 18A.”
(6) After that paragraph insert—
18A (1) A company may only make—
(a) a claim under paragraph 13,
(b) an election under paragraph 14, or
(c) a claim under paragraph 15,
at a time when it is a going concern.
(2) If a company ceases to be a going concern after making a claim for an R&D tax credit under paragraph 15, it shall be treated as if it had not made the claim (and, accordingly, as if there had been no payment of R&D tax credit to carry interest under section 826 of the Taxes Act 1988).
(3) Sub-paragraph (2) does not apply to the extent that the claim relates to an amount that was paid or applied before the company ceased to be a going concern.
(4) For the purposes of this paragraph, a company is a going concern if—
(a) its latest published accounts were prepared on a going concern basis, and
(b) nothing in those accounts indicates that they were only prepared on that basis because of an expectation that the company would receive relief or tax credits under this Schedule or Schedule 13 to the Finance Act 2002.
(5) Section 436(2) of the Companies Act 2006 (meaning of “publication” of documents) has effect for the purposes of this paragraph.”
2 (1) Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research etc) is amended as follows.
(2) In paragraph 14(1) (deduction in computing profits of trade), insert at the end “(subject to paragraph 18A)”.
(3) In paragraph 15(1) (alternative treatment of pre-trading expenditure: deemed trading loss), insert at the end “(subject to paragraph 18A)”.
(4) In paragraph 16(1) (entitlement to tax credit), insert at the end “(subject to paragraph 18A)”.
(5) In paragraph 18 (payment in respect of tax credit), insert at the end—
“(5) This paragraph has effect subject to paragraph 18A.”
(6) After that paragraph insert—
18A (1) A company may only make—
(a) a claim under paragraph 14,
(b) an election under paragraph 15, or
(c) a claim under paragraph 16,
at a time when it is a going concern.
(2) If a company ceases to be a going concern after making a claim for a tax credit under paragraph 16, it shall be treated as if it had not made the claim (and, accordingly, as if there had been no payment of tax credit to carry interest under section 826 of the Taxes Act 1988).
(3) Sub-paragraph (2) does not apply to the extent that the claim relates to an amount that was paid or applied before the company ceased to be a going concern.
(4) For the purposes of this paragraph, a company is a going concern if—
(a) its latest published accounts were prepared on a going concern basis, and
(b) nothing in those accounts indicates that they were only prepared on that basis because of an expectation that the company would receive relief or tax credits under this Schedule or Schedule 20 to the Finance Act 2000.
(5) Section 436(2) of the Companies Act 2006 (meaning of “publication” of documents) has effect for the purposes of this paragraph.”
3 The amendments made by this Schedule have effect in relation to claims and elections made, and amounts paid or applied, on or after such day as the Treasury may by order appoint.
Finance Act 2008