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How to show losses surrendered for R&D Tax Credit?

How to show the breakdown on the computation and ct600

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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.

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By daniel_
12th May 2019 10:51

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

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to daniel_
12th May 2019 11:00

Thank you very much. Regarding box 780 - what would be the net figure in that box?

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By daniel_
12th May 2019 11:12

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).

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to daniel_
12th May 2019 11:56

Thanks again.

Based on my example above, if £70k are the losses after all adjustment (depn, capital allowances etc) and £30k is the enhanced element of the R&D claim then box 780 is showing as £100k loss.

The bit where I am confused is on my computation and using Andica is very frustrating. I have used IRIS Business Tax previously and it was very good. Now I am on PTP Accounts Production and the PTP Business Tax doesn't seem the same as the original IRIS Business Tax whereas the accounts production is exactly the same. Do you recommend any software to do this?
My losses carried forward are showing as £100k with the extra 130%. If I have surrendered losses in order to claim the R&D tax credit, then how much should be the carried forward figure?

Initially I thought it was £20k to carry forward as the taxable loss was £70k without the extra 130% r&d. After deducting the total R&D it would leave £20k.
But if I use the loss including the extra 130% enhancement then I have losses of £100k and then if I minus the £50k R&D then it will leave £50k to carry forward.
For the computation, what is the correct losses carried forward?

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By daniel_
to rookie101
12th May 2019 13:40

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 £[email protected]% = £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

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13th May 2019 10:15

Thank you very much for your time and sorry for the trouble.

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