Section 1: Trading Profits Taxable at the Northern Ireland Rate Chapter 9
58.Chapter 9 modifies the treatment of research and development (R&D) expenditure credit under Part 3 (trading income) of CTA 2009.
59.Chapter 6A of Part 3 of CTA 2009 makes provision for R&D expenditure credit to be brought into account as a receipt in calculating the profits of a trade. Where a company is entitled to an R&D expenditure credit for a period and the company is a Northern Ireland company, Chapter 9 provides that the credit forms part of the mainstream profits or losses of the trade.
60.Chapter 9 also modifies Chapters 2 and 7 of Part 13 of CTA 2009 with regard to additional relief for expenditure on research and development in relation to expenditure incurred by a company in an accounting period in which it is a Northern Ireland company.
61.Chapter 2 of Part 13 of CTA 2009 makes provision for relief for R&D expenditure incurred by a company which is a small or medium size enterprise. It provides for an additional deduction for qualifying Chapter 2 (R&D) expenditure. Any resultant Chapter 2 loss may be surrendered for a payable tax credit.
62.Chapter 9 of Part 8B of CTA 2010 provides that where some of the Chapter 2 R&D expenditure is Northern Ireland expenditure (as defined in new section 357P(2)) an adjusted percentage is used to calculate the amount of additional deduction for the purposes of Chapter 2 of Part 13 of CTA 2009. The adjusted percentage is set to give the same cash value of the relief the company would have received if none of the Chapter 2 R&D expenditure were Northern Ireland expenditure.
63.Chapter 9 of Part 8B CTA 2010 modifies how the amount of R&D tax credit available under Chapter 2 of Part 13 CTA 2009 is calculated where the company has Northern Ireland Chapter 2 surrenderable losses (as defined in new section 357PC(3)(a)) to ensure the same amount of R&D tax credit is payable under section 1054 of CTA 2009, and that any losses carried forward after a claim for R&D tax credits is reduced by the losses surrendered.
64.Chapter 7 of Part 13 of CTA 2009 makes provision for the relief for R&D expenditure incurred by large companies on vaccine or medicine research. It provides for an additional deduction for qualifying Chapter 7 (R&D) expenditure.
65.Chapter 9 of Part 8B of CTA 2010 provides that where some expenditure that is eligible for relief under Chapter 7 of Part 13 CTA 2009 is Northern Ireland expenditure, an adjusted percentage is used to calculate the amount of additional deduction. The adjusted percentage is set to give the same cash value of the relief the company would have received if none of the Chapter 7 R&D expenditure was Northern Ireland expenditure.