Corporation Tax Act 2009 section 1055

Meaning of "Chapter 2 surrenderable loss"

Section 1055 defines what counts as a "Chapter 2 surrenderable loss" for the purposes of the SME R&D tax relief regime, including how to calculate the amount that can be surrendered.

• A Chapter 2 surrenderable loss arises when an SME company claims an additional R&D deduction and makes a trading loss, or is treated as having a deemed trading loss on pre-trading R&D expenditure.
• Where the loss arises from an additional deduction on an existing trade, the surrenderable amount is the lower of the unrelieved trading loss or 186% of the qualifying R&D expenditure.
• Where the loss arises from pre-trading R&D expenditure (treated as a deemed trading loss), the surrenderable amount is simply the full unrelieved trading loss.
• Only the portion of the trading loss that has not already been relieved through other means is eligible for surrender.