Corporation Tax (Northern Ireland) Bill (HC Bill 170)

(b) a single asset comprising intangible fixed assets that are not pre-
commencement assets is treated as itself being an asset which is
not a pre-commencement asset.

357OL   Realisation and acquisition of fungible assets

(1) 5Subsection (2) applies if—

(a) a company realises a fungible asset, and

(b) apart from section 357OK(2), the asset would be treated as part
of a single asset comprising both pre-commencement assets and
assets that are not pre-commencement assets.

(2) 10The realisation is treated as diminishing the single asset of the company
comprising pre-commencement assets in priority to diminishing the
single asset of the company comprising assets that are not pre-
commencement assets.

(3) Fungible assets acquired by a company that would not otherwise be
15treated as pre-commencement assets are so treated so far as they are
identified, in accordance with the following rules, with pre-
commencement assets realised by the company.

(4) Rule 1 is that assets acquired are identified with pre-commencement
assets of the same kind realised by the company within the period
20beginning 30 days before and ending 30 days after the date of the
acquisition.

(5) The reference in subsection (4) to assets “of the same kind” is to assets
that are, or but for section 357OK(2) would be, treated as part of a single
asset because of section 858 of CTA 2009.

(6) 25Rule 2 is that assets realised earlier are identified before assets realised
later.

(7) Rule 3 is that assets acquired earlier are identified before assets
acquired later.

(8) In this section—

• 30“fungible asset” means an intangible fixed asset to which section
  858 of CTA 2009 applies;

• “realisation”, in relation to a fungible asset, has the same meaning
  as in Part 8 of CTA 2009 (see sections 734 and 856 of that Act).

Assets treated as pre-commencement assets

357OM 35  Assets whose value derives from pre-commencement assets

(1) This section applies if—

(a) on or after the commencement day a company (“the acquiring
company”) acquires an intangible fixed asset (“the acquired
asset”) from a person (“the transferor”),

(b) 40the acquired asset is created on or after the commencement day,

(c) the value of the acquired asset derives in whole or in part from
any other asset (“the other asset”), and

(d) the other asset meets the pre-commencement status conditions.

(2) In the hands of the acquiring company the acquired asset is treated for
the purposes of this Chapter as a pre-commencement asset so far as its
value derives from the other asset.

(3) If only part of the value of the acquired asset derives from the other
5asset, this Chapter has effect as if there were separate assets
representing the part that does so derive and the part that does not so
derive.

(4) For the purposes of this section the cases in which the value of an asset
may be derived from any other asset include any case where—

(a) 10assets have been merged or divided,

(b) assets have changed their nature,

(c) rights or interests in or over assets have been created or
extinguished.

(5) Section 357ON supplements this section.

357ON 15  The pre-commencement status conditions

(1) For the purposes of section 357OM(1) the other asset meets the pre-
commencement status conditions if—

(a) it was created before the commencement day, or

(b) on or after the commencement day the other asset has been a
20pre-commencement asset in the hands of the transferor or any
other person.

(2) Any apportionment necessary for the purposes of section 357OM(3)
must be made on a just and reasonable basis.

(3) Sections 357OH(4), 357OI and 357OJ (provisions explaining when
25assets are treated as created) apply for the purposes of section 357OM
as they apply for the purposes of section 357OH(1).

(4) Expressions used in this section have the same meaning as in section
357OM.

357OO   Assets acquired in connection with disposals of pre-commencement
30assets

(1) This section applies if—

(a) a person disposes of an asset which—

(i) in the case of an intangible fixed asset, is a pre-
commencement asset, or

(ii) 35in the case of any other asset, was created before the
commencement day, and

(b) a company acquires an intangible fixed asset directly or
indirectly in consequence of the disposal or otherwise in
connection with it.

(2) 40The acquired asset is treated for the purposes of this Chapter as a pre-
commencement asset in the company’s hands.

(3) For the purposes of this section a person “disposes of” an asset if—

(a) for the purposes of TCGA 1992, the person makes a part
disposal of the asset or any other disposal of it,

(b) in the case of an intangible fixed asset, there is for the purposes
of Part 8 of CTA 2009 a realisation of the asset, or

(c) the person grants a licence in respect of the asset.

(4) For the purposes of this section it does not matter whether—

(a) 5the asset that the person disposes of is the same asset as the
acquired asset,

(b) the acquired asset is acquired at the time of the disposal, or

(c) the acquired asset is acquired by merging assets or otherwise.

Interpretation

357OP 10  Interpretation of Chapter

In this Chapter—

• “the commencement day” has the meaning given by section
  357OH(2);

• “the Northern Ireland element”, in relation to a realisation credit
  15or realisation debit, is to be read in accordance with section
  357OE;

• “Northern Ireland intangibles credits” means credits brought into
  account under Part 8 of CTA 2009 that are in accordance with
  section 357OB(2)(a) or (3) or section 357OC(2) Northern Ireland
  20intangibles credits;

• “Northern Ireland intangibles debits” means debits brought into
  account under Part 8 of CTA 2009 that are in accordance with
  section 357OB(2)(b) or (4) or section 357OC(3) Northern Ireland
  intangibles debits;

• 25“pre-commencement asset” has the meaning given by section
  357OH;

• “realisation credit” and “realisation debit” are to be read in
  accordance with section 357OD;

• “roll-over relief” has the meaning given by section 357OE.

CHAPTER 9 30Research and development expenditure

Introductory

357P Introduction and interpretation

(1) This Chapter makes provision about the operation of—

(a) Chapter 6A of Part 3 of CTA 2009 (trade profits: R&D
35expenditure credits),

(b) Chapter 2 of Part 13 of that Act (relief for SMEs: cost of R&D
incurred by SME), and

(c) Chapter 7 of that Part (relief for large companies: vaccine
research etc),

40in relation to expenditure incurred by a company in an accounting
period in which it is a Northern Ireland company.

(2) In this Chapter—

(a) “Northern Ireland expenditure” means expenditure incurred in
a trade to the extent that the expenditure forms part of the
Northern Ireland profits or Northern Ireland losses of the trade;

(b) “qualifying Chapter 2 expenditure” has the same meaning as in
5Part 13 of CTA 2009 (see section 1051 of that Act);

(c) “Northern Ireland qualifying Chapter 2 expenditure” means so
much of any qualifying Chapter 2 expenditure as forms part of
the Northern Ireland profits or Northern Ireland losses of a
trade;

(d) 10“qualifying Chapter 7 expenditure” has the same meaning as in
Part 13 of CTA 2009 (see section 1098 of that Act);

(e) “Northern Ireland qualifying Chapter 7 expenditure” means so
much of any qualifying Chapter 7 expenditure as forms part of
the Northern Ireland profits or Northern Ireland losses of a
15trade.

Chapter 6A of Part 3 of CTA 2009

357PA R&D expenditure credit under Chapter 6A of Part 3 of CTA 2009

(1) This section applies where—

(a) a company is entitled to an R&D expenditure credit under
20Chapter 6A of Part 3 of CTA 2009 (R&D expenditure credits) for
an accounting period in relation to a qualifying trade, and

(b) the company is a Northern Ireland company in the period.

(2) The R&D expenditure credit forms part of the mainstream profits or
mainstream losses of the trade.

25Chapter 2 of Part 13 of CTA 2009

357PB Additional deduction under section 1044 of CTA 2009

(1) This section applies where—

(a) a company is entitled to corporation tax relief under section
1044 of CTA 2009 (additional deduction in calculating profits of
30a trade) for an accounting period in relation to any qualifying
Chapter 2 expenditure,

(b) the company is a Northern Ireland company in the period, and

(c) some or all of the qualifying Chapter 2 expenditure is Northern
Ireland qualifying Chapter 2 expenditure.

(2) 35Section 1044(8) of CTA 2009 (amount of additional deduction) has
effect, in relation to the Northern Ireland qualifying Chapter 2
expenditure, as if the percentage specified in that provision were the
adjusted percentage.

(3) For the purposes of this section “the adjusted percentage” means—

40

(4) So much of the additional deduction under section 1044 of CTA 2009 as
is (by virtue of this section) calculated by reference to the adjusted
5percentage forms part of Northern Ireland profits or Northern Ireland
losses of the trade.

357PC Tax credit under section 1054 of CTA 2009: entitlement

(1) Section 1055 of CTA 2009 (meaning of “Chapter 2 surrenderable loss”)
does not apply to a company in relation to a qualifying trade it carries
10on in an accounting period in which it is a Northern Ireland company
(and the following provisions of this section apply instead).

(2) The company has a Chapter 2 surrenderable loss in the period for the
purposes of Chapter 2 of Part 13 of CTA 2009 if—

(a) it obtains an additional deduction under section 1044 of CTA
152009 in the accounting period in calculating the profits of the
trade, and

(b) it has—

(i) a Northern Ireland loss of the trade in the period, or

(ii) a mainstream loss of the trade in the period.

(3) 20In this Chapter—

(a) “Northern Ireland Chapter 2 surrenderable loss” means a
Chapter 2 surrenderable loss that a company has by virtue of
subsection (2)(b)(i);

(b) “mainstream Chapter 2 surrenderable loss” means a Chapter 2
25surrenderable loss that a company has by virtue of subsection
(2)(b)(ii).

(4) The amount of a Northern Ireland Chapter 2 surrenderable loss is—

(a) so much of the Northern Ireland loss in question as is
unrelieved, or

(b) 30if less, the Northern Ireland qualifying Chapter 2 expenditure in
respect of which the relief was obtained, multiplied by the
adjusted section 1044 percentage.

(5) The amount of a mainstream Chapter 2 surrenderable loss is—

(a) so much of the mainstream loss in question as is unrelieved, or

(b) 35if less, the qualifying Chapter 2 expenditure in respect of which
the relief was obtained that is not Northern Ireland qualifying
Chapter 2 expenditure, multiplied by the percentage specified
in section 1055(2)(b) of CTA 2009.

(6) For the purposes of this section “the adjusted section 1044 percentage”
40means—

(7) Section 1056 of CTA 2009 (amount of trading loss which is unrelieved)
applies for the purposes of this section.

(8) 5In the application of section 1056 of CTA 2009 by virtue of subsection
(7), subsection (2)(c) of that section has effect as if the reference to any
loss surrendered under Part 5 of CTA 2010 were—

(a) where the trading loss in question is a Northern Ireland loss, to
any of that Northern Ireland loss surrendered under that Part;

(b) 10where the trading loss in question is a mainstream loss, to any
of that mainstream loss surrendered under that Part.

357PD Tax credit under section 1054 of CTA 2009: amount of tax credit

(1) Section 1058(1) of CTA 2009 (amount of tax credit) does not apply to a
company in relation to a qualifying trade it carries on in an accounting
15period in which it is a Northern Ireland company (and the following
provisions of this section apply instead).

(2) The amount of the R&D tax credit to which the company is entitled for
the accounting period is, where the company—

(a) has a Northern Ireland Chapter 2 surrenderable loss, but

(b) 20does not have a mainstream Chapter 2 surrenderable loss,

the amount of the loss mentioned in paragraph (a) multiplied by the
relevant percentage.

(3) The amount of the R&D tax credit to which the company is entitled for
the accounting period is, where the company—

(a) 25has a mainstream Chapter 2 surrenderable loss, but

(b) does not have a Northern Ireland Chapter 2 surrenderable loss,

the amount of the loss mentioned in paragraph (a) multiplied by the
percentage specified in section 1058(1)(a) of CTA 2009.

(4) The amount of the R&D tax credit to which the company is entitled for
30the accounting period is, where the company has both a Northern
Ireland Chapter 2 surrenderable loss and a mainstream Chapter 2
surrenderable loss, the sum of—

(a) the amount of the Northern Ireland Chapter 2 surrenderable
loss multiplied by the relevant percentage, and

(b) 35the amount of the mainstream Chapter 2 surrenderable loss
multiplied by the percentage specified in section 1058(1)(a) of
CTA 2009.

(5) For the purposes of this section “the relevant percentage” means—

357PE Restriction on losses carried forward where tax credit claimed

(1) Section 1062(2) and (3) of CTA 2009 (restriction on losses carried
forward where tax credit claimed) do not apply to a company in
relation to a qualifying trade it carries on in an accounting period in
5which it is a Northern Ireland company (and the following provisions
of this section apply instead).

(2) For the purposes of section 45 of CTA 2010 (relief for trading losses
against future trading profits)—

(a) if the company has a Northern Ireland loss in the accounting
10period, that loss is treated as reduced by the amount of the
surrendered Northern Ireland loss for the period, and

(b) if the company has a mainstream loss in the accounting period,
that loss is treated as reduced by the amount of the surrendered
mainstream loss for the period.

(3) 15For the purposes of this section—

(a) the “amount of the surrendered Northern Ireland loss” for the
period means the amount of the Northern Ireland Chapter 2
surrenderable loss in respect of which the company claims an
R&D tax credit for the period, and

(b) 20the “amount of the surrendered mainstream loss” for the period
means the amount of the mainstream Chapter 2 surrenderable
loss in respect of which the company claims an R&D tax credit
for the period.

Chapter 7 of Part 13 of CTA 2009

357PF 25 Additional deduction under section 1087 of CTA 2009

(1) This section applies where—

(a) a company is entitled to corporation tax relief under section
1087 of CTA 2009 (deduction in calculating profits of a trade) for
an accounting period in relation to any qualifying Chapter 7
30expenditure,

(b) the company is a Northern Ireland company in the period, and

(c) some or all of the qualifying Chapter 7 expenditure is Northern
Ireland qualifying Chapter 7 expenditure.

(2) Section 1091 of CTA 2009 (amount of deduction) has effect, in relation
35to the Northern Ireland qualifying Chapter 7 expenditure, as if—

(a) the percentage specified in subsection (3) of that section were
the adjusted amount A percentage, and

(b) the percentage specified in subsection (4) of that section were
the adjusted amount B percentage.

(3) 40For the purposes of this section “the adjusted amount A percentage”
means—

(4) 5For the purposes of this section “the adjusted amount B percentage”
means—

(5) So much of the additional deduction under section 1087 of CTA 2009 as
15is (by virtue of this section) calculated by reference to the adjusted
amount A percentage or the adjusted amount B percentage forms part
of the Northern Ireland profits or Northern Ireland losses of the trade.

CHAPTER 10 Remediation of contaminated or derelict land

Introductory

357Q 20Introduction and interpretation

(1) This Chapter makes provision about the operation of Part 14 of CTA
2009 (remediation of contaminated or derelict land) in relation to
expenditure incurred by a company in an accounting period in which
it is a Northern Ireland company.

(2) 25In this Chapter—

(a) “Northern Ireland expenditure” means expenditure incurred in
a trade to the extent that the expenditure forms part of the
Northern Ireland profits or Northern Ireland losses of the trade;

(b) “qualifying land remediation expenditure” has the same
30meaning as in Part 14 of CTA 2009 (see section 1144 of that Act);

(c) “Northern Ireland qualifying land remediation expenditure”
means so much of any qualifying land remediation expenditure
as forms part of the Northern Ireland profits or Northern
Ireland losses of a trade.

35Additional deduction under section 1149 of CTA 2009

357QA Additional deduction

(1) This section applies where—

(a) a company is entitled to corporation tax relief under section
1149 of CTA 2009 (additional deduction for qualifying land
40remediation expenditure) for an accounting period in relation
to any qualifying land remediation expenditure,

(b) the company is a Northern Ireland company in the period, and

(c) some or all of the qualifying land remediation expenditure is
Northern Ireland qualifying land remediation expenditure.

(2) Section 1149(8) of CTA 2009 (amount of additional deduction) has
5effect, in relation to the Northern Ireland qualifying land remediation
expenditure, as if the percentage specified in that provision were the
adjusted percentage.

(3) For the purposes of this section “the adjusted percentage” means—

(4) So much of the additional deduction under section 1149 of CTA 2009 as
is (by virtue of this section) calculated by reference to the adjusted
percentage forms part of the Northern Ireland profits or Northern
Ireland losses of the trade.

20Tax credit under section 1151 of CTA 2009

357QB Tax credit: entitlement

(1) Section 1152 of CTA 2009 (meaning of “qualifying land remediation
loss”) does not apply to a company in relation to a qualifying trade it
carries on in an accounting period in which it is a Northern Ireland
25company (and the following provisions of this section apply instead).

(2) The company has a qualifying land remediation loss in the period for
the purposes of Chapter 3 of Part 14 of CTA 2009 if—

(a) it obtains an additional deduction under section 1149 of CTA
2009 in the accounting period in calculating the profits of the
30trade, and

(b) it has—

(i) a Northern Ireland loss of the trade in the period, or

(ii) a mainstream loss of the trade in the period.

(3) In this Chapter—

(a) 35“Northern Ireland qualifying land remediation loss” means a
qualifying land remediation loss that a company has by virtue
of subsection (2)(b)(i);

(b) “mainstream qualifying land remediation loss” means a
qualifying land remediation loss that a company has by virtue
40of subsection (2)(b)(ii).

(4) The amount of a Northern Ireland qualifying land remediation loss is—

(a) so much of the Northern Ireland loss in question as is
unrelieved, or

(b) if less, the Northern Ireland qualifying land remediation
expenditure in respect of which the relief was obtained,
multiplied by the adjusted section 1152 percentage.

(5) The amount of a mainstream qualifying land remediation loss is—

(a) 5so much of the mainstream loss in question as is unrelieved, or

(b) if less, the qualifying land remediation expenditure in respect of
which the relief was obtained that is not Northern Ireland
qualifying Chapter 2 expenditure, multiplied by the percentage
specified in section 1152(2)(b) of CTA 2009.

(6) 10For the purposes of this section “the adjusted section 1152 percentage”
means—

(7) Section 1153 of CTA 2009 (amount of trading loss which is unrelieved)
20applies for the purposes of this section.

(8) In the application of section 1153 of CTA 2009 by virtue of subsection
(7), subsection (1)(c) of that section has effect as if the reference to any
loss surrendered under Part 5 of CTA 2010 were—

(a) where the trading loss in question is a Northern Ireland loss, to
25any of that Northern Ireland loss surrendered under that Part;

(b) where the trading loss in question is a mainstream loss, to any
of that mainstream loss surrendered under that Part.

357QC Tax credit: amount of tax credit

(1) Section 1154(1) of CTA 2009 (amount of tax credit) does not apply to a
30company in relation to a qualifying trade it carries on in an accounting
period in which it is a Northern Ireland company (and the following
provisions of this section apply instead).

(2) The amount of the land remediation tax credit to which the company is
entitled for the accounting period is, where the company—

(a) 35has a Northern Ireland qualifying land remediation loss, but

(b) does not have a mainstream qualifying land remediation loss,

the amount of the loss mentioned in paragraph (a) multiplied by the
relevant percentage.

(3) The amount of the land remediation tax credit to which the company is
40entitled for the accounting period is, where the company—

(a) has a mainstream qualifying land remediation loss, but

(b) does not have a Northern Ireland qualifying land remediation
loss,

the amount of the loss mentioned in paragraph (a) multiplied by the
45percentage specified in section 1154(1) of CTA 2009.