I am currently completing a tax return for a loss making company. How do I go about surrendering losses in order to claim the R&D credit on the computation?
This is my example using round figures for simplicity. The company has a loss of £70k. The R&D expenditure in the year was £20k.
The enhanced R&D would be £20k x 230% = £50k. Resulting in a tax credit of £7,250 (£50k x 14.5%).
Am I right in saying that £20k losses should be carried forward and £50k will be surrendered in order to get the tax credit. My question is how do I show this on the computation? I am currently using Andica.
Also on the actual CT600 on box 660. Would I put £50k or £20k (using the example above).
If anyone could help with this, I would greatly appreciate it.
Replies (6)
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Not sure how it should be entered in Andica but per your figures.
Box 530 = 7250
Box 545 = 7250
Box 570 = 7250
Box 605 = 7250
Box 660 = 50k
Box 780 = 70k accounts loss + 30k enhancement + other adjustments to get trading loss.
Box 875 = 7250
Box 780 is the trading loss from your computation, after adding back depreciation, NTLR profits etc etc AND the R&D enhancement amount (130% as 100% is included in accounts profit already).
I've changed the numbers a little for this example hopefully it makes sense:
Loss per accounts £70,000
R&D enhancement £26,000
Trading loss £96,000
R&D Expenditure £20,000
R&D Enhancement £20k@130% = £26,000
Maximum surrenderable loss £46,000 (lower of enhanced R&D and unrelieved losses).
R&D tax credit = £46,000 @ 14.5% = £6,670
Loss reconciliation:
Trading loss £96,000
Surrendered £(46,000)
Losses carried forward £50,000