766A Tax credit on expenditure on buildings or structures used for research and development.
(1) (a) In this section—
“qualified company”, “relevant member State” and “research and development activities” have the same meanings as in section 766;
“refurbishment”, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal including the provision of water, sewerage or heating facilities carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure;
“relevant expenditure” on a building or structure, in relation to a company, means expenditure incurred by the company on the construction of a
>building or structure which is to be used wholly and exclusively for the purposes of the carrying on by the company of research and development activities in a relevant Member State<, being expenditure which qualifies for an allowance under Part 9 > or this Part<: but expenditure incurred by a company which is resident in the State shall not be relevant expenditure if it—
(i) may be taken into account as an expense in computing income of the company,
(ii) is expenditure in respect of which an allowance for capital expenditure may be made to the company, or
(iii) may otherwise be allowed or relieved in relation to the company,
for the purposes of tax in a territory other than the State.
(b) For the purposes of this section—
(i) expenditure shall not be regarded as having been incurred by a company if it has been or is to be met directly or indirectly
>by the State;<
(ii) a reference to expenditure incurred on the construction of a building or structure includes expenditure on the refurbishment of the building or structure, but does not include—
(I) any expenditure incurred on the acquisition of, or of rights in or over, any land,
(II) any expenditure on the provision of machinery or plant or on any asset treated for any chargeable period as machinery or plant, or
(III) any expenditure on research and development within the meaning of section 766;
(iii) where a building or structure which is to be used for the purposes of the carrying on of research and development activities forms part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the expenditure incurred on the construction of the whole building or number of buildings, as the case may be, for the purpose of determining the expenditure incurred on the construction of the building or structure which is to be used for the purposes of carrying on of research and development activities,
(iv) paragraphs (i) to (iii) of section 766(1)(b) shall apply.
(2) Where in an accounting period a qualified company incurs relevant expenditure on a building or structure, the corporation tax of the company for each accounting period falling wholly or partly into the period of 4 years commencing at the beginning of that accounting period shall be reduced by an amount determined by the formula—
E is an amount equal to 20 per cent of the amount of the relevant expenditure on the building or structure, and
M is the number of days in the accounting period which fall into that period of 4 years.
(i) in an accounting period a company incurs relevant expenditure on a building or structure,
(ii) in relation to that expenditure the corporation tax of the company is reduced under subsection (2), and
(iii) at any time in the period of 10 years commencing at the beginning of that accounting period the building or structure is sold or commences to be used for purposes other than the carrying on by the company of research and development activities,
then the company—
(I) shall not be entitled to reduce corporation tax under subsection (2) for any accounting period ending after the time specified in paragraph (iii), and
(II) shall be charged to tax under Case IV of Schedule D for the accounting period in which the building or structure is sold, or as the case may be commences to be used for purposes other than the carrying on by the company of research and development activities, in an amount equal to 4 times the aggregate amount by which corporation tax of the company or another company was reduced under subsection (2) or (4) in relation to that expenditure.
(4) (a) Subject to paragraphs (b) and (c) where as respects any accounting period of a company the amount by which the company is entitled under this section to reduce corporation tax of the accounting period exceeds the relevant corporation tax of the company for the accounting period, the excess shall be carried forward and treated as an amount by which corporation tax for the next succeeding accounting period may be reduced, and so on for succeeding accounting periods.
(b) Where the company referred to in paragraph (a) is a member of a group of companies, the company may specify that the excess specified in paragraph (a), or any part of that excess, is to be treated as an amount by which corporation tax payable by another company which is a member of that group for that other company’s corresponding accounting period is to be reduced.
(c) So much of the excess specified under paragraph (a) as is treated under paragraph (b) as an amount by which tax payable by another company is to be reduced shall not be carried forward under paragraph (a).
(5) Where a company claims relief under this section in respect of any accounting period, it shall specify the amount of relief claimed in its return under section 951 for that accounting period.