Corporation Tax Act 2009 section 1116

"The actual reduction in tax liability"

Section 1116 defines how to calculate "the actual reduction in tax liability", a key component in the formula used to determine whether a company must repay R&D tax relief when intellectual property arising from a publicly funded research project is transferred abroad (as set out in section 1114).

• The actual reduction in tax liability is the total of two elements: reductions in the claimant company's own corporation tax, and reductions in another group company's corporation tax arising from surrendered losses.
• The claimant's own tax reductions are those arising in any accounting period as a direct consequence of qualifying R&D relief on expenditure attributable to the relevant research and development project.
• Tax reductions in another company's liability count where those reductions result from a loss surrendered to that company by the claimant under the group relief or consortium relief rules.
• A surrendered loss only counts if it both was surrendered under the group or consortium relief provisions and arose as a consequence of qualifying R&D relief on expenditure attributable to the project in question.