Corporation Tax Act 2009 section 1054

Entitlement to and payment of tax credit

Section 1054 sets out the conditions under which a small or medium-sized enterprise (SME) is entitled to receive a research and development (R&D) tax credit and the process for claiming and receiving payment of that credit.

• A company qualifies for an R&D tax credit if it has a "Chapter 2 surrenderable loss" in the accounting period — essentially a trading loss generated by enhanced R&D expenditure relief.
• To obtain the credit, the company must submit a formal claim to HMRC; it may claim against all or only part of the surrenderable loss, giving flexibility in how much loss is surrendered.
• Once a valid claim is made, HMRC is obliged to pay the tax credit to the company, with the amount calculated in accordance with the rules in section 1058.
• Where a company claims an R&D tax credit, the amount of trading losses it can carry forward to future periods is restricted accordingly under section 1062.