766D. Research and development corporation tax credit: expenditure on buildings or structures

(1) Where in an accounting period a qualified company incurs relevant expenditure and the company makes a claim on that behalf it shall be entitled to an amount (in this section referred to as ‘the credit’) equal to 25 per cent of the specified relevant expenditure.

(2) (a) This subsection applies in respect of a qualified company (in this subsection referred to as a ‘surrendering company’) that—

(i) in respect of any accounting period claims the credit in accordance with this section,

(ii) specifies that the credit, or any portion of that credit, shall be treated as an overpayment of tax under subsection (6)(a), and

(iii) is a member of a group of companies,

where the amount specified under subparagraph (ii) is in excess of that company’s liabilities (within the meaning of section 960H), and the difference between that amount so specified and those liabilities shall be referred to in this subsection as ‘the excess’.

(b) A surrendering company may make a claim under paragraph (c) in respect of the amount of the excess.

(c) A surrendering company may, on making a claim in that behalf, specify that all or part of the excess is to be treated as an amount of an overpayment (within the meaning of section 960H) by another company which is a member of that group for that other company’s corresponding accounting period.

(d) A claim under paragraph (c) shall be made in such form as the Revenue Commissioners may prescribe.

(3) Where—

(a) in an accounting period a company incurs relevant expenditure on a building or structure,

(b) in relation to that expenditure the credit has been claimed under this section, and

(c) at any time in the period of 10 years commencing at the beginning of the accounting period referred to in paragraph (a) the building or structure is sold or ceases to be used by the company for the purpose of research and development activities or for the purpose of the same trade that was carried on by the company at the beginning of the specified relevant period, in connection with which the research and development activities were carried on,

then the company shall be charged to tax under Case IV of Schedule D for the accounting period in which the building or structure is sold or ceases to be used for the purpose of research and development activities or for the purpose of the trade, in an amount equal to 4 times the amount claimed.

(4) (a) Where expenditure is incurred by a company on a building or structure and the building or structure will not be used by the company wholly and exclusively for the purposes of research and development, the proportion of the use of the building or the amount of the expenditure attributable to research and development shall be such portion of the use of the building or the expenditure as is just and reasonable.

(b) Where, at any time, any apportionment referred to in paragraph (a), or a further apportionment made under this paragraph, ceases to be just and reasonable, then—

(i) such further apportionment shall be made at that time as is just and reasonable,

(ii) any such further apportionment shall supersede any earlier apportionment, and

(iii) any such adjustments, assessments or repayments of tax shall be made as are necessary to give effect to any apportionment under this subsection.

(5) Where, in an accounting period, a company makes a claim in respect of the credit under subsection (1) the amount so claimed shall be payable in 3 annual instalments as follows:

(a) the first instalment shall equal 50 per cent of the amount of the credit claimed;

(b) the second instalment, if any, shall be an amount determined by the formula—

(A – B) X 3/5

where—

A is the amount of the credit claimed, and

B is the amount of the first instalment under paragraph (a);

(c) the third instalment, if any, shall be an amount determined by the formula—

A – (B + C)

where—

A is the amount of the credit claimed,

B is the amount of the first instalment under paragraph (a), and

C is the amount of the second instalment under paragraph (b).

(6) The company shall specify in respect of each instalment referred to in subsection (5) whether such amounts, or any portion of such amounts, are to be—

(a) treated as an overpayment of tax, for the purposes of section 960H, or

(b) paid to the company by the Revenue Commissioners.

(7) The credit, if any, arising to a company in accordance with this section shall not be income of the company or another company for any tax purpose.

(8) Any claim under this section shall be made within 12 months from the end of the accounting period in which the expenditure, giving rise to the claim, is incurred and shall be made in the return that the company is required to file, under Part 41A, in respect of that accounting period.

(9) (a) Any claim in respect of the credit under subsection (1) (whether the amount of the credit is to be treated as an overpayment of tax under subsection (6)(a) or paid to the company under subsection (6)(b)) shall, for the purposes of sections 851A and 851B, Chapter 4 of Part 38 and Part 47, be treated as a claim for a credit and the amount so claimed shall be treated as an amount of tax refundable.

(b) In respect of a claim in respect of the credit that remains unpaid, for the purposes of determining an amount in accordance with subsections (3) or (4) of section 1077F, a reference to an amount of tax that would have been payable for the relevant period by the person concerned shall be read as if it were a reference to the amount so claimed.

(c) (i) Subject to subparagraph (ii), where a company makes a claim in respect of the credit and it is subsequently found that the claim is not as authorised by this section then the company may be charged to tax under Case IV of Schedule D for the accounting period in respect of which the payment was made or the amount surrendered, as the case may be, in an amount equal to 4 times so much of the amount of the credit as is not so authorised.

(ii) An amount chargeable to tax under this paragraph shall be treated—

(I) as income against which no loss, deficit, expense or allowance may be set off, and

(II) as not forming part of the income of the company for the purposes of calculating a surcharge under section 440.

(d) Where in accordance with paragraph (c) an assessment is made the amount so charged shall, for the purposes of section 1080, be deemed to be tax due and payable and shall carry interest as determined in accordance with subsection (2)(c) of section 1080 as if a reference to the date when the tax became due and payable were a reference to the date the amount was paid or offset, under section 960H, by the Revenue Commissioners.

(10) Where a claim in respect of the credit under this section is made the amount of the credit shall be paid or offset in full, in the manner specified by the company under subsection (6), by the Revenue Commissioners within 48 months from when a valid claim is made and where a valid claim has been made—

(a) the first instalment shall be payable on the making of the return referred to in subsection (8),

(b) the second instalment shall be payable—

(i) where the accounting period (in this subsection referred to as the ‘first-mentioned accounting period’) immediately succeeding the accounting period in respect of which the claim was made is for a period of 12 months, on the filing of the return that the company is required to file under Part 41A for the firstmentioned accounting period, or

(ii) in all other cases, 12 months after the specified return date, within the meaning of Part 41A, for the return referred to in subsection (8),

and

(c) the third instalment shall be payable—

(i) where the accounting period (in this subsection referred to as the ‘second-mentioned accounting period’) immediately succeeding the first-mentioned accounting period is for a period of 12 months, on the filing of the return that the company is required to file under Part 41A for the second-mentioned accounting period, or

(ii) in all other cases, 24 months after the specified return date, within the meaning of Part 41A, for the return referred to in subsection (8).

(11) No amount of the credit shall be paid or offset under subsection (10) unless a valid claim has been made to the Revenue Commissioners for that purpose.

(12) Where a company specifies that the first instalment, under subsection (5)(a), is to be treated, under subsection (6)(a), as an overpayment of tax, and where that amount is, under section 960H, offset in whole or in part against the company’s corporation tax payable (within the meaning of Part 41A) for the accounting period, then, for the purposes of calculating the amount of preliminary tax due in respect of that accounting period and the subsequent accounting period under section 959AR or 959AS, as the case may be, the amount of corporation tax payable by the company for that accounting period shall be reduced by the amount so offset.

(13) In this section, “valid claim” means a claim in relation to the credit which is made under and in accordance with this section and in respect of which all information which the Revenue Commissioners may reasonably require to enable them determine if, and to what extent, the credit is due to a company in respect of an accounting period, has been furnished by that company.

(14) In this section, a reference to an amount payable, in so far as the reference is in respect of the credit, shall be construed as a reference to any amount to be offset under section 960H pursuant to subsection (6)(a) or to be paid under subsection (6)(b), as the case may be.