Section 312 — Corporation Tax Act 2010: Qualifying pre-commencement expenditure

Qualifying pre-commencement expenditure 312 1 For the purposes of this Chapter, expenditure is “qualifying pre-commencement expenditure” if it meets each of conditions A to D.

2 Condition A is that the expenditure is incurred on or after 1 January 2006.

3 Condition B is that the expenditure is incurred in the course of oil extraction activities.

4 Condition C is that the expenditure is incurred by a company with a view to carrying on a ring fence trade but before the company sets up and commences the ring fence trade.

5 Condition D is that the expenditure—

a is subsequently allowable as a deduction in calculating the profits of the ring fence trade for the commencement period (whether or not any part of it is so allowable for any post-commencement period), or b is relevant R&D expenditure incurred by an SME.

6 For the purposes of this section, expenditure incurred by a company is “relevant R&D expenditure incurred by an SME ” if—

a the company makes an election under section 1045 of CTA 2009 (alternative treatment for pre-trading expenditure: deemed trading loss) in respect of that expenditure, but b the company does not make a claim for an R&D tax credit under section 1054 of that Act in respect of that expenditure.

7 In the case of any qualifying pre-commencement expenditure which is relevant R&D expenditure incurred by an SME, the amount of that expenditure is treated for the purposes of this Chapter as being equal to 150% of its actual amount. 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .