188ÌåÓý

Application of S104N CTA 2009

STEP 1

The set off amount is to be applied in discharging the corporation tax liability of the company for the accounting period.

Ìý	Values
Turnover	£15³¾
Other Income \nRDEC (@10%)	£1³¾
R&D	(£10³¾)
Other	(£2.5³¾)
Profit	£3.5³¾
CT profits	£3.5³¾ @ 23% £805,000
CT Liability	£805,000
RDEC amount remaining\n(after discharging liability)	£195,000

The £195,000 is the amount of payable credit remaining after discharging the company liability for the period.

STEP 2

If the amount remaining after Step 1 is greater than the net value of the set-off amount that amount is to be reduced to the net value of the set-off amount.

Compare the amount remaining after step 1 with the net value of the credit i.e. after deducting the main rate of potential corporation tax on the credit.

Ìý	Values
Amount remaining from Step 1	£195,000 (1) with
Net expenditure credit (£1³¾ less 23%)	£770,000 (2)
c/fwd lesser of (1) and (2) to Step 3	£195,000

STEP 3

If the amount remaining after Step 2 is greater than the company’s total expenditure on workers for the accounting period (see section 104P)�

e) that amount is to be reduced to the amount of that expenditure (which may be nil),

and

f) the amount deducted under paragraph (a) from the amount remaining after step 2 is to be treated for the purposes of this section as an amount of R&D expenditure credit to which the company is entitled for its next accounting period.

The company’s total expenditure on workers is based on the R&D workers� PAYE and NIC (with no restriction for time spent on R&D activity), and R&D group externally provided workers (but restricted to time spent on qualifying R&D activity)

Ìý	Values
b/fwd from step 2	£195,000 (3)
Relevant PAYE/NIC	£400000 (4)

If (4) is less than (3) then amount is capped to that relevant PAYE/NIC. £195000 c/fwd to step 4.

STEP 4

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

Ìý	Values
b/fwd from Step 3	£195,000
Other period CT liability	£50,000
Balance c/fwd to Step 5	£145,000

£50000 has been used to settle another year’s company liability.

STEP 5

If the company is a member of a group, it may surrender the whole or any part of the amount remaining after step 4 to any other member of the group (see section 104R).

Ìý	Values
b/fwd from Step 4	£145,000
CT liabilities of the Group	£ nil
Balance c/fwd to Step 6	£145,000

STEP 6

The amount remaining after step 5 is to be applied in discharging any other liability of the company to pay a sum to the Commissioners under or by virtue of an enactment or under a contract settlement.

Ìý	Values
b/fwd from Step 5	£145,000
CT liabilities of the Group	£ nil
Balance c/fwd to Step 7	£145,000

STEP 7

Ìý	Values
Payable to company	£145,000
Summary	Ìý
Discharge against current liability (Step 1)	£805,000
Set off against company liability from another period (Step 4)	£50,000
RDEC paid (Step 7)	£145,000
Total	£1,000,000

The amount remaining after Step 6 is payable to the company by an officer of Revenue and Customs but subject to S104S i.e. that the company is a going concern.