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Corporation Tax Bill


Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 15 — Research and development

771

 

      (2)  

In Chapter 2 (relief for SMEs: cost of R&D incurred by SME)—

(a)   

in section 1044(8), for “75%” substitute “50%”,

(b)   

in section 1045(7), for “175%” substitute “150%”,

(c)   

in section 1055(2)(b), for “175%” substitute “150%”, and

(d)   

in section 1058(1)(a), for “14%” substitute “16%”.

5

      (3)  

In Chapter 7 (relief for SMEs and large companies: vaccine research etc)—

(a)   

in section 1089(2), for “40%” substitute “50%”,

(b)   

in section 1090(2), for “40%” substitute “50%”,

(c)   

in section 1091

(i)   

in subsection (3), for “40%” substitute “50%”, and

10

(ii)   

in subsection (4), for “140%” substitute “150%”,

(d)   

in section 1092(8)—

(i)   

in paragraph (a), for “40%” substitute “50%”, and

(ii)   

in paragraph (b), for “140%” substitute “150%”, and

(e)   

in section 1104(5), for “140%” substitute “150%”.

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R&D threshold in section 1050: qualifying Chapter 3 and 4 expenditure

113   (1)  

The references in section 1050(3)(b) and (c) to qualifying Chapter 3

expenditure and qualifying Chapter 4 expenditure do not include any such

expenditure incurred before 1 April 2002.

      (2)  

For the purposes of sub-paragraph (1) section 61 (pre-trading expenses) is to

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be ignored.

Chapters 3 to 5 of Part 13: expenditure incurred before 1 April 2002

114   (1)  

Chapters 3 to 5 of Part 13 do not apply to expenditure incurred before 1 April

2002.

      (2)  

For this purpose section 61 (pre-trading expenses) is to be ignored.

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Chapter 7 of Part 13: expenditure incurred before 22 April 2003

115   (1)  

Chapter 7 of Part 13 (relief for SMEs and large companies: vaccine research

etc) does not apply to expenditure incurred before 22 April 2003.

      (2)  

For this purpose section 61 (pre-trading expenses) is to be ignored.

Cap on R&D aid under Chapter 2 or 7 of Part 13

30

116        

For the purposes of any calculation in accordance with section 1114, no

account is to be taken of any qualifying R&D relief (as defined in section

1113(4)) in respect of expenditure incurred before 1 August 2008.

Chapter 7 of Part 13: qualifying expenditure on contracted out R&D

117   (1)  

Section 1135(4) (time limit for notice of election for connected persons

35

treatment) does not apply to a notice of an election under that section in

relation to a sub-contractor payment made by a company if—

(a)   

the company has qualifying expenditure on contracted out research

and development (as defined in section 1102),

(b)   

the sub-contractor is—

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Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 15 — Research and development

772

 

(i)   

a charity,

(ii)   

a university, or

(iii)   

an association of a description specified in section 508 of

ICTA (scientific research organisations), and

(c)   

the notice is given before 1 August 2009.

5

      (2)  

In sub-paragraph (1) “sub-contractor” and “sub-contractor payment” have

the same meaning as in Part 13 (see section 1133).

Small or medium-sized enterprises

118   (1)  

In relation to expenditure incurred before 1 August 2008, Part 13 has effect

with the omission of the larger SME provisions.

10

      (2)  

The “larger SME provisions” are—

sections 1089(4) and 1090 (modification of section 1089 for larger

SMEs),

section 1093 (modification of section 1092 for larger SMEs),

section 1104(5) (modification of amount B in section 1104 for larger

15

SMEs),

qualification 1 in section 1120(2) (qualifications to section 1119), and

section 1121 (meaning of “larger SME”).

      (3)  

But for the purpose of determining, in relation to expenditure incurred on or

after 1 August 2008, whether a company is a small or medium-sized

20

enterprise within the meaning of Part 13, the larger SME provisions are to be

treated as always having had effect.

Staffing costs

119   (1)  

In its application to expenditure incurred—

(a)   

before 1 April 2004, and

25

(b)   

in an accounting period ending on or after 6 April 2003,

           

section 1123 has effect with the following modification.

      (2)  

For subsections (2) and (3) substitute—

    “(2)  

This subsection applies to earnings paid by the company to

directors or employees of the company.

30

           

For this purpose “earnings” means earnings or amounts treated as

earnings which constitute employment income (see section 7(2)(a)

or (b) of ITEPA 2003).”

120        

In its application to expenditure incurred before 1 August 2008, section 1123

has effect with the omission of subsections (5) and (6).

35

121   (1)  

In relation to expenditure incurred before 27 September 2003, section 1124

applies, for the purposes of Chapters 2 and 7 of Part 13, with the

modification in sub-paragraph (3).

      (2)  

In relation to expenditure incurred before 9 April 2003, section 1124 applies,

for the purposes of Chapters 3 to 5 of Part 13, with the modification in sub-

40

paragraph (3).

      (3)  

For subsections (3) and (4) substitute—

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 15 — Research and development

773

 

“(3)   

In the case of a director (“D”) or employee (“E”) partly engaged

directly and actively in relevant research and development the

following rules apply—

(a)   

if the time D or E spends so engaged is less than 20% of D’s

or E’s total working time, none of the staffing costs relating to

5

D or E is treated as attributable to relevant research and

development,

(b)   

if the time D or E spends so engaged is more than 80% of D’s

or E’s total working time, the whole of the staffing costs

relating to D or E is treated as attributable to relevant

10

research and development,

(c)   

in any other case, an appropriate proportion of the staffing

costs relating to D or E is treated as attributable to relevant

research and development.”

Expenditure on software or consumable items

15

122   (1)  

In relation to expenditure incurred before 1 April 2004, Part 13 applies with

the following modifications.

      (2)  

For “software or consumable items” in each place where it occurs, substitute

“consumable stores”.

      (3)  

For sections 1125 and 1126 substitute—

20

        

1125   Consumable stores

(1)   

For the purposes of this Part expenditure on consumable stores

means expenditure that would be treated as expenditure on

consumable stores in accordance with normal accounting practice.

(2)   

For the purposes of this Part expenditure on consumable stores is

25

attributable to relevant research and development if the stores are

employed directly in such research and development.”

Qualifying expenditure on externally provided workers

123   (1)  

In relation to expenditure incurred before 27 September 2003, Chapters 2

and 4 of Part 13 (relief for SMEs: cost of R&D borne by SME, and subsidised

30

expenditure on R&D) apply with the omission of—

(a)   

section 1052(2)(c),

(b)   

section 1071(3)(c),

(c)   

in section 1134(3)(c), the words “or is qualifying expenditure on

externally provided workers”,

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(d)   

section 1134(5)(b), and

(e)   

sections 1127 to 1132, as they apply for the purposes of those

Chapters.

      (2)  

In relation to expenditure incurred before 9 April 2003, Chapter 3 of Part 13

(relief for SMEs: R&D sub-contracted to SME) applies with the omission of—

40

(a)   

section 1066(3)(c), and

(b)   

sections 1127 to 1132, as they apply for the purposes of that Chapter.

      (3)  

In relation to expenditure incurred before 9 April 2003, Chapter 5 of Part 13

(relief for large companies) applies with the omission of—

(a)   

section 1077(2)(c), and

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Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 16 — Remediation of contaminated land

774

 

(b)   

sections 1127 to 1132, as they apply for the purposes of that Chapter.

      (4)  

In relation to expenditure incurred by a large company before 27 September

2003, Chapter 7 of Part 13 (relief for SMEs and large companies: vaccine

research etc) applies in the case of such a company with the omission of—

(a)   

section 1101(4)(c), and

5

(b)   

sections 1127 to 1132, as they apply for the purposes of that Chapter.

      (5)  

In sub-paragraph (4) “large company” has the same meaning as in Part 13.

Qualifying expenditure on relevant payments to subjects of clinical trials

124   (1)  

In relation to expenditure incurred before 1 August 2008, Chapter 2 of Part

13 (relief for SMEs: cost of R&D borne by SME) applies with the omission

10

of—

(a)   

section 1052(2)(d),

(b)   

section 1071(3)(d),

(c)   

in section 1134(3)(c), the words “or relevant payments to the subjects

of a clinical trial”, and

15

(d)   

section 1140, as it applies for the purposes of that Chapter.

      (2)  

In relation to expenditure incurred before 1 August 2008, Chapter 3 of Part

13 (relief for SMEs: cost of R&D sub-contracted to SME) applies with the

omission of—

(a)   

section 1066(3)(d), and

20

(b)   

section 1140, as it applies for the purposes of that Chapter.

      (3)  

In relation to expenditure incurred before 1 April 2006, Chapter 4 of Part 13

(relief for SMEs: subsidised expenditure on R&D) applies with the omission

of—

(a)   

section 1071(3)(d),

25

(b)   

in section 1134(3)(c), the words “or relevant payments to the subjects

of a clinical trial”, and

(c)   

section 1140, as it applies for the purposes of that Chapter.

      (4)  

In relation to expenditure incurred before 1 April 2006, Chapter 5 of Part 13

(relief for large companies) applies with the omission of—

30

(a)   

section 1077(2)(d), and

(b)   

section 1140, as it applies for the purposes of that Chapter.

      (5)  

In relation to expenditure incurred before 1 August 2008, Chapter 7 of Part

13 (relief for SMEs and large companies: vaccine research etc) applies with

the omission of—

35

(a)   

section 1101(4)(d), and

(b)   

section 1140, as it applies for the purposes of that Chapter.

Part 16

Remediation of contaminated land

Part 14: expenditure incurred before 11 May 2001

40

125   (1)  

Part 14 does not apply to expenditure incurred before 11 May 2001.

      (2)  

For this purpose section 61 (pre-trading expenses) is to be ignored.

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 17 — Film production

775

 

Staffing costs

126   (1)  

In its application to expenditure incurred—

(a)   

before 1 April 2004, and

(b)   

in an accounting period ending on or after 6 April 2003,

           

section 1170 has effect with the following modification.

5

      (2)  

For subsections (2) and (3) substitute—

“(2)   

This subsection applies to earnings paid by the company to directors

or employees of the company.

   

For this purpose “earnings” means earnings or amounts treated as

earnings which constitute employment income (see section 7(2)(a) or

10

(b) of ITEPA 2003).”

Part 17

Film production

Interpretation

127        

The provisions of sections 1181 to 1187 apply for the purposes of this Part of

15

this Schedule as if this Part were contained in Part 15 of this Act.

Chapters 2 and 3 of Part 15 to apply only to films that commence principal photography on or

after 1 January 2007

128        

Chapters 2 and 3 of Part 15 apply only in relation to films that commence

principal photography on or after 1 January 2007 (but see paragraphs 130

20

and 131).

129        

The references in section 1206 to the functions of the Secretary of State under

Schedule 1 to the Films Act 1985 (c. 21) are to those functions only so far as

they are exercised in relation to films that commence principal photography

on or after 1 January 2007 (but see paragraphs 130 and 131).

25

Application of Part 15 etc to films that commenced principal photography before 1 January

2007 but were not completed before that date

130   (1)  

The Treasury may make provision by regulations for the application of the

provisions of—

(a)   

Part 15 or section 812 of this Act, and

30

(b)   

Chapter 3 of Part 3 of FA 2006 and any enactment amended by that

Chapter,

           

in relation to films that commenced principal photography before 1 January

2007 but were not completed before that date.

      (2)  

The regulations may provide for such adaptations and modifications of—

35

(a)   

the provisions mentioned in sub-paragraph (1), and

(b)   

any other provision of the Corporation Tax Acts,

           

as appear to the Treasury appropriate for that purpose.

      (3)  

The regulations may—

(a)   

provide that the provisions of Part 15 or section 812 of this Act (or

40

any specified provisions of that Part or section) or Chapter 3 of Part

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 17 — Film production

776

 

3 of FA 2006 (or any specified provisions of that Chapter) have effect

as if they had been in force at all material times,

(b)   

require or authorise the making or amendment of returns, or the

making of assessments, in relation to past accounting periods or tax

years (whenever beginning), and

5

(c)   

authorise the making of any such return, amendment or assessment

despite any limitation on the time within which a return,

amendment or assessment may normally be made.

131   (1)  

In accordance with Part 1 of this Schedule, the Corporation Tax (Taxation of

Films) (Transitional Provisions) Regulations 2007 (S.I. 2007/1050) have

10

effect as if made under paragraph 130 above.

      (2)  

For that purpose they are amended as follows.

      (3)  

In regulation 1(2) for “(films and sound recordings)” substitute “and Part 15

and section 812 of the Corporation Tax Act 2009 (film production)”.

      (4)  

Omit regulation 2.

15

      (5)  

In regulation 3 for “Chapter 3 of Part 3” substitute “Part 15 and section 812

of the Corporation Tax Act 2009, Chapter 3 of Part 3 of the Finance Act 2006”.

      (6)  

In regulation 4 for “section 32” substitute “section 1182 of the Corporation

Tax Act 2009” (and make a corresponding change in the heading for

regulation 4).

20

      (7)  

In regulation 5 for “section 40” substitute “section 1197 of the Corporation

Tax Act 2009” (and make a corresponding change in the heading for

regulation 5).

      (8)  

In regulation 6(1) after “section 46” insert “of the Finance Act 2006” (and

make a corresponding change in the heading for regulation 6).

25

      (9)  

In regulation 7(1) after “section 47” insert “of the Finance Act 2006” (and

make a corresponding change in the heading for regulation 7).

     (10)  

For regulation 8 substitute—

“8      

Modification of section 812 of the Corporation Tax Act 2009

(intangible fixed assets: films)

30

In section 812(1) of the Corporation Tax Act 2009—

(a)   

in paragraph (a) for “that began principal photography

before 1st January 2007” substitute “to which Chapter 2 of

Part 15 of the Corporation Tax Act 2009 does not apply”, and

(b)   

in paragraph (b) for “1st October 2007” substitute “31st

35

March 2008”.

     (11)  

For regulation 9 substitute—

“9      

Modification of section 1188 of the Corporation Tax Act 2009 (taxation

of activities of film production company)

In section 1188(1) of the Corporation Tax Act 2009 (taxation of

40

activities of film production company) after “a film” insert “if the

film—

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 18 — Management expenses

777

 

(a)   

is certified by the Secretary of State under Schedule 1 to the

Films Act 1985 as a British film for the purposes of film tax

relief, and

(b)   

is intended for theatrical release at the time principal

photography commences”.

5

     (12)  

In regulation 10(1) after “Schedule 5” insert “to the Finance Act 2006” (and

make a corresponding change in the heading for regulation 10).

     (13)  

Omit regulation 10(2).

     (14)  

In regulation 10(5) for the words after “sections 46 and 47” substitute “of the

Finance Act 2006 (films: withdrawal of existing reliefs) and section 1188(1)

10

of the Corporation Tax Act 2009 (taxation of activities of film production

company)”.

     (15)  

In regulation 13(1)—

(a)   

for “Chapter 3 of Part 3” substitute “Part 15 or section 812 of the

Corporation Tax Act 2009, of Chapter 3 of Part 3 of the Finance Act

15

2006”, and

(b)   

for “whether before or after the commencement of that Chapter”

substitute “whenever beginning”.

Prohibition on double counting

132   (1)  

Expenditure is not to be taken into account for the purposes of Chapter 2 of

20

Part 15 if relief has been given in respect of it under—

(a)   

section 40B, 41 or 42 of F(No.2)A 1992,

(b)   

section 48 of F(No.2)A 1997, or

(c)   

section 135, 136 to 138A or 139 to 142 of ITTOIA 2005.

      (2)  

For the purposes of paragraph 130 and any regulations made under that

25

paragraph, sub-paragraph (1) of this paragraph is treated as if contained in

Part 15.

Part 18

Management expenses

Unpaid remuneration

30

133   (1)  

This paragraph applies for the purposes of section 1249.

      (2)  

In relation to a period of account ending before 27 November 2002, an

amount charged in the accounts in respect of employees’ remuneration

includes an amount which is held by an intermediary with a view to its

becoming employees’ remuneration.

35

      (3)  

In relation to a period of account ending on or after 27 November 2002, an

amount charged in the accounts in respect of employees’ remuneration

includes an amount—

(a)   

in respect of employee benefit contributions (within the meaning of

sections 1290 to 1296) made before that date, and

40

(b)   

which is held by an intermediary,

           

with a view to its becoming employees’ remuneration.

 
 

 
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