Corporation Tax Act 2009 section 104N

Payment of R&D expenditure credit

Section 104N explains how a company's R&D expenditure credit is calculated for payment purposes and the specific order in which it must be set off against various liabilities before any cash payment is made.

• The credit is first used to pay off the company's corporation tax liability for the relevant accounting period.
• The remaining credit is then reduced to its "net value" (the credit minus the corporation tax and supplementary charge that would notionally be due on it), and further capped at the company's total expenditure on workers for the period.
• Any surplus after these reductions is applied against corporation tax for other periods, surrendered to group companies, or used to discharge other amounts owed to HMRC.
• Only after all these set-offs and restrictions have been applied is any remaining balance paid to the company in cash by HMRC.