Corporation Tax Act 2009 section 1060

Use of credit to pay corporation tax

Section 1060 deals with how an R&D tax credit payable to a company can be applied against corporation tax liabilities, and the circumstances in which payment of the credit may be withheld.

• An R&D tax credit, or interest on it, can be set against any outstanding corporation tax liability of the company
• To the extent the credit is applied against corporation tax, HMRC's obligation to pay the credit directly to the company is treated as satisfied
• Payment of the credit may be withheld while an HMRC enquiry into the company's tax return for the relevant period is ongoing, though a provisional payment may be made at the officer's discretion
• Payment of the credit may also be withheld if the company has outstanding PAYE or National Insurance contributions liabilities for the accounting period in question