Corporation Tax Act 2009 section 104R

Surrender of credit to other group companies

Section 104R explains how a company that has earned an R&D expenditure credit can surrender all or part of that credit to another company within the same corporate group, and how the surrendered amount is applied against the receiving company's corporation tax liability.

• A company may surrender its R&D expenditure credit to another member of the same group
• The surrendered amount is applied against the receiving company's corporation tax liability for any period that overlaps with the surrender period, on a proportionate basis
• Any portion of the surrendered amount that cannot be applied against the receiving company's tax liability is treated as if it had never been surrendered, reverting to the original company
• The surrender is tax-neutral — neither company includes it in calculating profits or losses for corporation tax purposes, and it is not treated as a distribution