A company may claim a first-year tax credit for a chargeable period in which it has a surrenderable loss, unless it is an excluded company in relation to that chargeable period.

A company which is entitled to an amount of first-year tax credit may claim the whole amount or part only of the amount.

The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1)(a) such other percentage as it thinks fit.

An order under sub-paragraph (4) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

In determining whether expenditure is relevant first-year expenditure, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.

The Treasury may by order substitute, for the date for the time being specified in sub-paragraph (1)(b) as the date with which the period ends, such later date as it thinks fit.

An order under sub-paragraph (3) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

This paragraph applies where the qualifying activity is F47an ordinary UK property business or an ordinary overseas property business and paragraph 7 does not apply.

References in this Schedule to a loss incurred in carrying on the qualifying activity are to a loss incurred in carrying on that part of the business (if any) to which F18sections 62 and 63 of CTA 2010 (UK property business losses) apply (see section 64 of that Act).

This paragraph applies where the qualifying activity is an overseas property business and paragraph 7 does not apply.

References in this Schedule to a loss incurred in carrying on the qualifying activity are to a loss incurred in carrying on that part of the business (if any) to which F19section 66 of CTA 2010 (losses from overseas property business) applies F20(see section 67 of that Act).

References in this Schedule to a loss incurred in carrying on the qualifying activity are to a loss which is treated under section 432AB(3) of ICTA, for the purposes of section 76 of that Act, as expenses payable which fall to be brought into account at Step 3 of subsection (7) of that section.

Where the insurance company is treated under section 432AA of that Act as carrying on more than one F3UK property business or overseas property business, references in this Schedule to a loss incurred in carrying on the qualifying activity are to be construed in accordance with section 432AB(4) of that Act (aggregation of losses).

This paragraph applies where the qualifying activity is managing the investments of a company with investment business.

This paragraph applies where the qualifying activity is life assurance business and the profits of that business are charged to tax under the I minus E basis.

The company incurs a loss in a chargeable period if in that chargeable period an amount falls to be carried forward to a succeeding chargeable period under section 76(12) of ICTA (carrying forward unrelieved expenses).

The amount of the loss is the amount which falls to be so carried forward.

This paragraph applies where the qualifying activity is a trade F46, a UK furnished holiday lettings business or an EEA furnished holiday lettings business and paragraph 14 or 16 does not apply.

This paragraph applies where the qualifying activity is F45an ordinary UK property business or an ordinary overseas property business and paragraph 14 does not apply.

For this purpose, no account is to be taken of any losses brought forward from an earlier chargeable period under F31section 62(5) of CTA 2010.

This paragraph applies where the qualifying activity is an overseas property business and paragraph 14 does not apply.

The amount of the loss that is unrelieved is the amount of the loss, reduced by any amount set off against the loss under F32Chapter 7 of Part 4 of CTA 2010 (write-off of government investment).

For this purpose, no account is to be taken of any losses brought forward from an earlier chargeable period under F33section 66 of CTA 2010.

If no amount falls to be carried forward to a succeeding chargeable period under section 76(12) of ICTA (carrying forward unrelieved expenses), no amount of the loss is unrelieved.

Sub-paragraph (6) applies for determining whether there is an amount which falls to be carried forward under section 76(12) of ICTA.

This paragraph applies where the qualifying activity is managing the investments of a company with investment business.

For this purpose, no account is to be taken of any amount brought forward from an earlier chargeable period under F10section 1223 of CTA 2009.

This paragraph applies where the qualifying activity is life assurance business and the profits of that business are charged to tax under the I minus E basis.

A “payment period” means a period which ends on the 5th day of a month and for which the company is liable to account for income tax and national insurance contributions to HMRC.

Where a company is entitled to a first-year tax credit for a chargeable period and makes a claim for payment of the credit, HMRC must pay to the company the amount of the credit.

To the extent that it is so applied, HMRC's obligation under sub-paragraph (1) is discharged.

Where HMRC enquires into the company's company tax return for the chargeable period, no payment in respect of a first-year tax credit for that chargeable period need be made before HMRC's enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).

In those circumstances HMRC may make a payment on a provisional basis of such amount as it thinks fit.

For the purposes of the relieving provisions (see paragraph 20), the company's loss from the qualifying activity for a chargeable period in which it claims a first-year tax credit is treated as reduced by the amount of the loss surrendered.

The total amount which falls to be carried forward to a succeeding chargeable period under section 76(12) of ICTA is treated as reduced by the amount of the loss surrendered.

This paragraph applies where the qualifying activity is life assurance business and the profits of that business are charged to tax under the I minus E basis.

The appropriate part (“the restored loss”) of the loss surrendered under this Schedule in that chargeable period is to be treated as if it were not a surrenderable loss in that chargeable period.

The amount of the restored loss is to be calculated in accordance with paragraph 26.

The amount of first-year tax credit paid to the company in respect of the restored loss is to be treated as if it ought never to have been paid.

The amount of first-year tax credit paid to the company in respect of the restored loss is the relevant percentage of the restored loss.

“Relevant percentage” means the percentage specified in paragraph 2(1)(a) for the chargeable period for which the first-year tax credit is paid.

This Part of this Schedule applies to an amount of first-year tax credit which is payable for a chargeable period but not yet paid, as it applies to an amount of first-year tax credit which is paid.

This paragraph applies for the interpretation of this Part of this Schedule.

References to a first-year tax credit being paid include the case where an amount payable in respect of first-year tax credit is applied in discharging any liability of the company's to pay corporation tax.

An item of plant or machinery is tax-relieved if any expenditure on the item was relevant first-year expenditure in respect of which a first-year allowance was made for the chargeable period for which the first-year tax credit was paid.

The original expenditure on the item is the amount of the relevant first-year expenditure on the item.

The disposal value of the item is the disposal value required to be brought into account by the company in respect of the item.

A “continuity of business provision” is an enactment under which anything done to or by the company which ceases to be the owner of the item is treated, for the purpose of making allowances and charges under this Act, as having been done to or by the person who becomes the owner of the item.

The retained tax-relieved plant and machinery is the tax-relieved plant and machinery which the company has not disposed of.

The amount of the restored loss is—

but where the amount given by that formula is less than nil, the amount of the restored loss is nil.

In sub-paragraph (1)—

• LS is the amount of loss surrendered under this Schedule in the chargeable period for which the first-year tax credit was paid,

• OERPM is the amount (or the aggregate of the amounts) of the original expenditure on the retained tax-relieved plant and machinery after the item is disposed of,

• OE is the aggregate of the amount of the original expenditure on the item disposed of, and the amounts of the original expenditure on any items of tax-relieved plant and machinery which the company has previously disposed of,

• DV is the aggregate of the disposal value of the item disposed of, and the disposal values of any items of tax-relieved plant and machinery which the company has previously disposed of, and

• ARL is the amount of the restored loss (or the aggregate of the amounts of the restored loss) on any previous application of this paragraph.

Where paragraph 24 applies, all such assessments and adjustments of assessments are to be made as are necessary.

If a company which has made a tax return becomes aware that, as a result of that paragraph applying after the return was made, the return has become incorrect, it must give notice to HMRC specifying how the return needs to be amended.

The notice must be given within 3 months beginning with the day on which the company became aware that anything in the tax return had become incorrect because of paragraph 24.

To the extent that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it shall be disregarded in determining for a chargeable period the amount of any first-year tax credit to which a company is entitled under this Schedule.

“Arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.