Corporation Tax Act 2009 section 1049

Restriction on consortium relief

Section 1049 restricts the surrender of SME research and development relief through consortium group relief claims where the consortium includes a large company.

• Where an SME claims the additional R&D deduction (section 1044) or elects deemed trading loss treatment for pre-trading R&D expenditure (section 1045), restrictions apply if the company is owned by a consortium that includes at least one large company.
• The relief obtained cannot be surrendered to another company through a consortium group relief claim unless the receiving company is itself a small or medium-sized enterprise.
• This prevents losses created by SME R&D relief from being passed up to large company consortium members who would not themselves qualify for the SME scheme.
• A consortium group relief claim means a claim based on consortium conditions 1, 2 or 3 in sections 132 and 133 of CTA 2010, which govern group relief between members of consortia.