Corporation Tax Act 2009 section 722

Receipts in respect of royalties so far as not dealt with under section 721

Section 722 acts as a safety net to ensure that royalty income which escapes the normal accruals-based tax credit rules is still brought into charge to corporation tax.

• Where a royalty receipt does not generate a tax credit under the normal accruals rule (section 721), a separate credit must be recognised for tax purposes
• The credit is brought into account in the accounting period in which the receipt is recognised in the company's accounts
• The amount of the credit equals whatever portion of the royalty receipt has not already been credited under the normal accruals rule
• This provision targets exceptional royalty situations where timing differences might otherwise allow income to fall outside the tax charge