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Rates of research and development relief and vaccine research relief |
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Rates of research and development relief: SMEs |
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1 (1) | Part 2 of Schedule 20 to FA 2000 (giving effect to R&D tax relief) is amended |
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(2) | In each of the following provisions, for “150%” substitute “175%”— |
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(a) | paragraph 13 (deduction in computing profits of trade), |
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(b) | paragraph 14(2) (alternative treatment of pre-trading expenditure), |
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(c) | paragraph 15(3)(b) (entitlement to R&D tax credit). |
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(3) | In paragraph 16(1)(a) (amount of R&D tax credit), for “16%” substitute |
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(4) | The amendments made by this paragraph have effect in relation to |
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expenditure incurred on or after such day as the Treasury may by order |
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(5) | The Treasury may appoint a day before the day on which this Act is passed, |
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but not one before 1 April 2008. |
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Rates of research and development tax relief: large companies |
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2 (1) | In Schedule 12 to FA 2002 (tax relief for expenditure on research and |
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development), in both of the following provisions, for “25%” substitute |
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(a) | paragraph 11(2) (deduction in computing profits of trade), and |
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(b) | paragraph 15(4) (refunds of contributions to independent research |
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(2) | The amendments made by sub-paragraph (1) have effect in relation to |
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expenditure incurred on or after 1 April 2008. |
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Rates of vaccine research relief |
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3 (1) | Schedule 13 to FA 2002 (vaccine research relief) is amended as follows. |
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(2) | In each of the following provisions, for “50%” substitute “40%”— |
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(a) | paragraph 14(2) (deduction in computing profits of trade: small and |
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(b) | paragraph 15(2)(a) (alternative treatment of pre-trading expenditure: |
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(c) | paragraph 15A(2) (modifications for larger SMEs claiming R&D tax |
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(d) | paragraph 21(2) (deduction in computing profits of trade: large |
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(e) | paragraph 25(4)(a)(i) and (b)(i) (refunds of contributions to |
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independent research and development). |
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(3) | In each of the following provisions, for “150%” substitute “140%”— |
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(a) | paragraph 15(2)(b) (alternative treatment of pre-trading |
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expenditure: deemed trading loss), |
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(b) | paragraph 16A(1) (entitlement to tax credit: modifications for larger |
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(c) | paragraph 21(3) (deduction in computing profits of trade: large |
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(d) | paragraph 25(4)(a)(ii) and (b)(ii) (refunds of contributions to |
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independent research and development). |
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(4) | The amendments made by this paragraph have effect in relation to |
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expenditure incurred on or after such day as the Treasury may by order |
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(5) | The Treasury may appoint a day before the day on which this Act is passed, |
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but not one before 1 April 2008. |
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Companies in difficulty: SME R&D relief and vaccine research relief |
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Research and development relief |
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1 (1) | Schedule 20 to FA 2000 (tax relief for expenditure on research and |
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development) is amended as follows. |
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(2) | In paragraph 13 (deduction in computing profits of trade), insert at the end |
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“(subject to paragraph 18A)”. |
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(3) | In paragraph 14(2) (alternative treatment of pre-trading expenditure), insert |
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at the end “(subject to paragraph 18A)”. |
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(4) | In paragraph 15(1) (entitlement to R&D tax credit), insert at the end “(subject |
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(5) | In paragraph 18 (payment in respect of R&D tax credit) insert at the end— |
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“(5) | This paragraph has effect subject to paragraph 18A.” |
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(6) | After that paragraph insert— |
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“R&D tax relief or tax credit only available where company is a going concern |
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18A (1) | A company may only make— |
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(a) | a claim under paragraph 13, |
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(b) | an election under paragraph 14, or |
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(c) | a claim under paragraph 15, |
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| at a time when it is a going concern. |
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(2) | If a company ceases to be a going concern after making a claim for |
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an R&D tax credit under paragraph 15, it shall be treated as if it |
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had not made the claim (and, accordingly, as if there had been no |
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payment of R&D tax credit to carry interest under section 826 of |
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(3) | Sub-paragraph (2) does not apply to the extent that the claim |
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relates to an amount that was paid or applied before the company |
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ceased to be a going concern. |
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(4) | For the purposes of this paragraph, a company is a going concern |
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(a) | its latest published accounts were prepared on a going |
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(b) | nothing in those accounts indicates that they were only |
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prepared on that basis because of an expectation that the |
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company would receive relief or tax credits under this |
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Schedule or Schedule 13 to the Finance Act 2002. |
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(5) | Section 436(2) of the Companies Act 2006 (meaning of |
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“publication” of documents) has effect for the purposes of this |
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2 (1) | Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research etc) is |
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(2) | In paragraph 14(1) (deduction in computing profits of trade), insert at the |
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end “(subject to paragraph 18A)”. |
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(3) | In paragraph 15(1) (alternative treatment of pre-trading expenditure: |
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deemed trading loss), insert at the end “(subject to paragraph 18A)”. |
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(4) | In paragraph 16(1) (entitlement to tax credit), insert at the end “(subject to |
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(5) | In paragraph 18 (payment in respect of tax credit) insert at the end— |
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“(5) | This paragraph has effect subject to paragraph 18A.” |
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(6) | After that paragraph insert— |
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“Relief or tax credit only available where company is a going concern |
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18A (1) | A company may only make— |
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(a) | a claim under paragraph 14, |
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(b) | an election under paragraph 15, or |
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(c) | a claim under paragraph 16, |
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| at a time when it is a going concern. |
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(2) | If a company ceases to be a going concern after making a claim for |
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a tax credit under paragraph 16, it shall be treated as if it had not |
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made the claim (and, accordingly, as if there had been no payment |
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of tax credit to carry interest under section 826 of the Taxes Act |
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(3) | Sub-paragraph (2) does not apply to the extent that the claim |
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relates to an amount that was paid or applied before the company |
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ceased to be a going concern. |
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(4) | For the purposes of this paragraph, a company is a going concern |
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(a) | its latest published accounts were prepared on a going |
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(b) | nothing in those accounts indicates that they were only |
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prepared on that basis because of an expectation that the |
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company would receive relief or tax credits under this |
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Schedule or Schedule 20 to the Finance Act 2000. |
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(5) | Section 436(2) of the Companies Act 2006 (meaning of |
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“publication” of documents) has effect for the purposes of this |
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3 | The amendments made by this Schedule have effect in relation to claims and |
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elections made, and amounts paid or applied, on or after such day as the |
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Treasury may by order appoint. |
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Calculation of total R&D aid |
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Calculation of total R&D aid |
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1 | For the purposes of section 27, “total R&D aid”, in respect of expenditure by |
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a company (the “claimant”) attributable to a research and development |
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project, is calculated as follows— |
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TC is the tax credits (see paragraph 2), |
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R is the actual reduction in tax liability (see paragraph 3), |
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P is the potential relief (see paragraph 4), |
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CT is the main rate of corporation tax at the time when the total R&D |
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N is the notional relief (see paragraph 5). |
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2 (1) | In paragraph 1 “the tax credits” means the aggregate of the tax credits that |
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have been paid to the claimant under paragraph 18 of Schedule 20 to FA |
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2000 or paragraph 18 of Schedule 13 to FA 2002 in respect of expenditure |
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attributable to the project. |
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(2) | A tax credit that has been claimed but not paid or applied shall be treated for |
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the purposes of sub-paragraph (1) as if it had been paid, unless the claimant |
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has been informed by Her Majesty’s Revenue and Customs that the tax |
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credit will not be paid or applied. |
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3 | In paragraph 1 “the actual reduction in tax liability” means the aggregate |
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(a) | the amounts by which the liability of the claimant to pay corporation |
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tax has been reduced in any accounting period in consequence of |
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R&D relief in respect of expenditure attributable to the project, and |
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(b) | the amounts by which the liability of any other company to pay |
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corporation tax has been reduced in any accounting period in |
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consequence of a surrender to the company by the claimant under |
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section 402 of ICTA (surrender of relief between members of groups |
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and consortia) of a loss arising in consequence of R&D relief in |
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respect of expenditure attributable to the project. |
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4 (1) | In paragraph 1 “the potential relief” means the aggregate amount of any |
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R&D relief (other than a tax credit)— |
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(a) | in respect of which the claimant has made a claim or election, but |
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(b) | which, as at the day on which the total R&D aid is calculated, has not |
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been brought into account by the claimant or by any other company. |
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(2) | R&D relief shall not be counted for the purposes of sub-paragraph (1) if the |
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claimant has been informed by Her Majesty’s Revenue and Customs that it |
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is not entitled to the relief. |
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5 (1) | In paragraph 1 “the notional relief” is the aggregate amount of relief that the |
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claimant could have claimed under Schedule 12 to FA 2002 (tax relief for |
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expenditure on R&D: large companies etc) in any accounting period in |
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respect of qualifying R&D expenditure attributable to the project if it had |
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been a large company throughout the accounting period. |
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“large company” has the meaning given in paragraph 2 of Schedule 12 |
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“qualifying R&D expenditure” means expenditure that, in the |
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accounting period in question, was— |
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(a) | qualifying R&D expenditure within the meaning of Schedule |
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(b) | qualifying expenditure within the meaning of Schedule 13 to |
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6 | In this Schedule “R&D relief” means any relief or tax credit under— |
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(a) | Schedule 20 to FA 2000 (tax relief for expenditure by SMEs on |
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research and development), or |
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(b) | Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research |
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7 | For the purpose of any calculation in accordance with paragraph 1, no |
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account shall be taken of any R&D relief in respect of expenditure incurred |
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before the day on which this Schedule comes into force. |
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8 | In Schedule 20 to FA 2000 (tax relief for expenditure by SMEs on research |
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and development), in paragraph 1 (entitlement), insert at the end— |
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“(5) | This paragraph has effect subject to section 27 of the Finance Act |
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9 | In Schedule 12 to FA 2002 (tax relief for expenditure on research and |
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(a) | after paragraph 10B insert— |
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10C | For the purposes of this Schedule, the SME’s “capped SME |
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expenditure” is any expenditure— |
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(a) | in respect of which the company is not entitled to |
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relief under Schedule 20 to the Finance Act 2000 by |
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reason only of section 27 of the Finance Act 2008 |
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(b) | which satisfies paragraph 10B(a) and (c).”, |
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(b) | in paragraph 11(3)(c), insert at the end “and capped SME |
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expenditure (see paragraph 10C)”, and |
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(c) | in paragraph 15(1)(d), insert at the end “or capped SME |
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10 | In Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research etc), |
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in paragraph 1 (entitlement), insert at the end— |
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“(3) | This paragraph has effect subject to section 27 of the Finance Act |
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Corporate Venturing Scheme |
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1 | Part 3 of Schedule 15 to FA 2000 (CVS: the issuing company) is amended as |
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2 | In paragraph 26 (excluded activities)— |
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(a) | in sub-paragraph (1), after paragraph (h) insert— |
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(hc) | producing steel;”, and |
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(b) | in sub-paragraph (2), after the entry relating to paragraph 30 insert— |
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“paragraph 30A (shipbuilding); |
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paragraph 30B (producing coal); |
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paragraph 30C (producing steel);”. |
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3 | After paragraph 30 insert— |
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“Excluded activities: shipbuilding |
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30A | In paragraph 26(1)(ha) “shipbuilding” has the same meaning as in |
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the Framework on state aid to shipbuilding (2003/C 317/06), |
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published in the Official Journal on 30 December 2003. |
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Excluded activities: producing coal |
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30B (1) | This paragraph supplements paragraph 26(1)(hb). |
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(2) | “Coal” has the meaning given by Article 2 of Council Regulation |
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(EC) No. 1407/2002 (state aid to coal industry). |
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(3) | The production of coal includes the extraction of it. |
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Excluded activities: producing steel |
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30C | In paragraph 26(1)(hc) “steel” means any of the steel products |
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listed in Annex 1 to the Guidelines on national regional aid (2006/ |
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C 54/08), published in the Official Journal on 4 March 2006.” |
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Enterprise Investment Scheme |
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4 | Chapter 4 of Part 5 of ITA 2007 (EIS: the issuing company) is amended as |
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5 | In section 192 (meaning of “excluded activities”)— |
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(a) | in subsection (1), after paragraph (i) insert— |
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(ic) | producing steel,”, and |
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(b) | in subsection (2), after paragraph (d) insert— |
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“(da) | section 196A (shipbuilding), |
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(db) | section 196B (producing coal), |
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(dc) | section 196C (producing steel),”. |
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6 | After section 196 insert— |
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“196A | Excluded activities: shipbuilding |
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In section 192(1)(ia) “shipbuilding” has the same meaning as in the |
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Framework on state aid to shipbuilding (2003/C 317/06), published |
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in the Official Journal on 30 December 2003. |
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196B | Excluded activities: producing coal |
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(1) | This section supplements section 192(1)(ib). |
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(2) | “Coal” has the meaning given by Article 2 of Council Regulation (EC) |
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No. 1407/2002 (state aid to coal industry). |
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(3) | The production of coal includes the extraction of it. |
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196C | Excluded activities: producing steel |
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In section 192(1)(ic) “steel” means any of the steel products listed in |
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Annex 1 to the Guidelines on national regional aid (2006/C 54/08), |
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published in the Official Journal on 4 March 2006.” |
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7 | Chapter 4 of Part 6 of ITA 2007 (VCTs: qualifying holdings) is amended as |
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