696J Provisions relating to groups

(1) Where eligible expenditure in respect of a taxable field is incurred by a company (in this section referred to as the ‘first company’), and

(a)another company is a wholly-owned subsidiary of the first company, or

(b)the first company is, at the time the eligible expenditure is incurred, a wholly-owned subsidiary of another company (in this section referred to as the ‘parent company’),

then, the expenditure or so much of it as the first company specifies, may at the election of that company be deemed to be eligible expenditure in respect of the taxable field incurred—

(i)in the case referred to in paragraph (a), by such other company (being a wholly-owned subsidiary of the first company) as the first company specifies, and

(ii)in the case referred to in paragraph (b), by the parent company or by such other company (being a wholly-owned subsidiary of the parent company) as the first company specifies.

(2)Where under subsection (1) eligible expenditure incurred by a first company is deemed to have been incurred by another company (in this subsection referred to as the ‘other company’)—

(a)the expenditure shall be deemed to have been incurred by the other company at the time at which the expenditure was actually incurred by the first company, and

(b)in the application of this Chapter the expenditure shall be deemed—

(i)to have been incurred by the other company for the purposes of determining the cumulative field costs of that company, and

(ii)not to have been incurred by the first company for the purposes of determining the cumulative field costs of that company.

(3)The same expenditure shall not be taken into account in relation to the determination of cumulative expenditure for more than one taxable field by virtue of this section.

(4)Subsection (5) of section 694 applies for the purposes of subsection (1) as it applies for the purposes of that subsection.