Corporation Tax Act 2010 section 357PC

Tax credit under section 1054 of CTA 2009: entitlement

Section 357PC modifies the rules for surrendering SME R&D trading losses in exchange for a tax credit, where the company is a Northern Ireland company carrying on a qualifying trade.

• Northern Ireland companies cannot use the standard definition of "Chapter 2 surrenderable loss" and must instead split their surrenderable losses into a Northern Ireland component and a mainstream component
• A Northern Ireland Chapter 2 surrenderable loss is capped at the lower of the unrelieved Northern Ireland loss and the Northern Ireland qualifying R&D expenditure multiplied by an adjusted percentage that reflects the ratio of the main CT rate to the Northern Ireland CT rate
• A mainstream Chapter 2 surrenderable loss is capped at the lower of the unrelieved mainstream loss and the non-Northern Ireland qualifying R&D expenditure multiplied by the standard percentage from CTA 2009
• The adjusted section 1044 percentage is calculated as 100 + (A × MR / NIR), where A is the enhanced deduction percentage, MR is the main corporation tax rate, and NIR is the Northern Ireland corporation tax rate