Section 1042I Redemption of value of expenditure creditF1

If a company is entitled to, and claims, an R&D expenditure credit for an accounting period, the credit is to be dealt with as follows.

• Step 1

  The amount of the credit is to be applied in discharging any liability of the company to pay corporation tax for the accounting period.

• Step 2

  If there is a notional tax deduction (see section 1042K), it is to be applied to any amount remaining after step 1.

• Step 3

  If the amount remaining after step 2 exceeds the cap by reference to the company’s PAYE and NIC liabilities for the accounting period (see section 1112B), the excess is to be deducted.

• Step 4

  Any amount remaining after step 3 is to be applied in discharging any liability of the company to pay corporation tax for any other accounting period.

• Step 5

  If the company is a member of a group, it may surrender the whole or part of any amount remaining after step 4 to any other member of the group (as to which see section 1042N).

• Step 6

  Any amount remaining after step 5 is to be applied in discharging any other liability of the company to pay a sum to the Commissioners for His Majesty’s Revenue and Customs—

  1. (a)

     under or by virtue of an enactment, or

  2. (b)

     under an agreement made in connection with any person’s liability to make a payment to the Commissioners under or by virtue of an enactment.

• Step 7

  Any amount remaining after step 6 is (subject to sections 1112F and 1112H) to be paid to the company by an officer of Revenue and Customs.