Corporation Tax Act 2009 section 104O

Amounts deducted by way of tax adjustment

Section 104O explains how any excess R&D expenditure credit remaining after the initial set-off process can be carried forward or surrendered, and the rules governing the order in which these amounts are applied.

• Where the amount after step 1 in the payment calculation exceeds the net value of the set-off, the difference can be carried forward to discharge the company's corporation tax liability for a later accounting period.
• The excess amount may alternatively be surrendered to another company within the same group, subject to the conditions in section 104R(3).
• Any amounts used to discharge a liability for a subsequent period must be applied before the amounts dealt with in steps 1, 4, and 5 of the payment calculation in section 104N(2).
• The surrender of these amounts is ignored when calculating profits or losses for corporation tax purposes and is not treated as a distribution.