Corporation Tax Act 2009 section 1111

Restriction on losses carried forward where tax credit claimed

Section 1111 deals with the restriction on carrying forward losses where a company has claimed an R&D tax credit in exchange for surrendering those losses.

• When a company claims an R&D tax credit, it surrenders trading losses in return for a cash payment or credit from HMRC.
• Any losses that have been surrendered in exchange for the R&D tax credit are permanently used up — they cannot also be carried forward to set against future profits.
• This prevents a company from obtaining a double benefit by both receiving a tax credit and retaining the same losses for future use.
• The restriction applies automatically to the amount of loss surrendered, reducing the pool of losses otherwise available for carry forward.