Corporation Tax Act 2009 section 1099

SMEs: qualifying expenditure "for" an accounting period

Section 1099 explains how qualifying research and development expenditure is allocated to accounting periods for small or medium-sized enterprises, with special rules for pre-trading expenditure.

• Qualifying expenditure is allocated to the accounting period in which it would be deductible when calculating trade profits for that period.
• Pre-trading R&D expenditure is not simply treated as incurred on the first day of trading, as would normally be the case under the general rules in Part 3 of the Act.
• Instead, pre-trading expenditure is treated as incurred for the accounting period in which it would have been deductible if the company had already been carrying on a trade.
• Relief for pre-trading expenditure is available both under the additional deduction for SMEs and under the main R&D relief rule, provided the expenditure can be deducted in calculating trade profits.