(1)A company is entitled to corporation tax relief for an accounting period if it meets conditions AF1... and C.
(2)Condition A is that the company is a small or medium-sized enterprise in the period.
F2(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)Condition C is that the company has incurred qualifying Chapter 2 expenditure in the period which—
(a)is not allowable as a deduction in calculating for corporation tax purposes the profits of a trade carried on by it at the time the expenditure was incurred, but
(b)would have been so allowable had it, at that time, been carrying on a trade consisting of the activities in respect of which the expenditure was incurred.
(5)For the company to obtain the relief it must make an election.
See section 1046 (which prevents a company from making an election if it is not a going concern).
(6)The relief is that the company is treated as if it had made a trading loss in the period.
(7)The trading loss is equal to [F3225%] of the qualifying Chapter 2 expenditure.
(8)If a company makes an election under this section in respect of qualifying Chapter 2 expenditure, section 61 (pre-trading expenses) does not apply to the expenditure.
(9)This section is subject to section 1113 (cap on R&D aid in relation to a particular research and development project).
(10)For the meaning of “qualifying Chapter 2 expenditure” see section 1051.
(11)See also section 1137, which makes provision about the accounting periods of a company which is not within the charge to corporation tax.
Textual Amendments
F1Word in s. 1045(1) omitted (with effect in accordance with Sch. 3 para. 39 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 3(4)(a)
F2S. 1045(3) omitted (with effect in accordance with Sch. 3 para. 39 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 3(4)(b)
F3Word in s. 1045(7) substituted (with effect in accordance with Sch. 3 para. 38 of the amending Act) by Finance Act 2012 (c. 14), Sch. 3 para. 2(3)