Section 1045 — Corporation Tax Act 2009: Alternative treatment for pre-trading expenditure: deemed trading loss

Alternative treatment for pre-trading expenditure: deemed trading loss 1045 1 A company is entitled to corporation tax relief for an accounting period if it meets each of conditions A to D .

2 Condition A is that the company is a small or medium-sized enterprise in the period. 2A Condition B is that the company—

a meets the R&D intensity condition in the period, or b obtained relief under this Chapter for its most recent prior accounting period of 12 months’ duration, having met the R&D intensity condition in that period. 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. 4A Condition D is that the company is not an ineligible company (see section 1142).

5 For the company to obtain the relief it must make an election (see section 1047, and also section 1112F ) . ...

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 186% 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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.