Corporation Tax Act 2009 section 1042O

Adaptation of entitlement for certain insurance businesses

Section 1042O modifies how the R&D expenditure credit rules apply to insurance companies whose basic life assurance and general annuity business (BLAGAB) is taxed under the I-E (income less expenses) basis rather than on a normal trading profit basis.

• This section applies where an insurance company is taxed on its BLAGAB under the I-E rules and does not calculate a BLAGAB trade profit or loss for the accounting period.
• References in the expenditure credit rules to expenditure allowable as a trading deduction are read as if the company had calculated a BLAGAB trade profit or loss, even though it has not actually done so.
• References to calculating trade profits are instead read as references to calculating the I-E profit of the company's BLAGAB.
• Any receipt arising under these provisions is treated as though it had been taken into account in calculating the company's BLAGAB trade profit or loss, so that it feeds into the I-E regime as a deemed I-E receipt.