CT600 Corporation Tax Returns

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CT600L Research and Development

CT600L Tax Return Form for Research and Development

You need to complete these supplementary pages if:

What to do when you have completed these supplementary pages:

  • Copy the figure from box L125 on these pages to box 880 on form CT600
  • Copy the figure from box L210 on these pages to box 530 on form CT600

Guidance on the Research and Development reliefs can be found in Corporate Intangibles Research and Development Manual.

The legislation for Research and Development Expenditure Credit (RDEC) is found at Chapter 6A of Part 3 of the Corporation Tax At 2009 and the legislation for Research and Development Relief for Small and Medium Sized Enterprises (SME) is found in Part 13 of the Corporation Tax At 2009.

Notes:

The following information is required:

  • L1 - Company name: Enter the name of the company.
  • L2 - Tax reference: Enter the company’s 10 digit unique taxpayer reference.
    Period covered by this supplementary page (cannot exceed 12 months)
  • L3 - from DD MM YYYY: Enter the start date of the accounting period.
  • L4 - to DD MM YYYY: Enter the end date of the accounting period.
  • L5 - Step 2 restriction brought forward from previous accounting periods and/or surrendered from group companies
  • L6 - Corporation Tax Liability
  • L7 - Amount of Step 2 brought forward and surrendered RDEC used to discharge Corporation Tax Liability (copy this figure to box L194)
  • L8 - Amount of Step 2 brought forward RDEC carried forward to next accounting period (box L5 minus box L7) (copy this figure to box L129)
  • L9 - Remaining Corporation Tax Liability carried forward to Step 1 (box L6 minus box L7) (copy this figure to box L30)

Step 1 - Calculation of RDEC set against Corporation Tax Liability

Guidance for the RDEC scheme can be found in the Corporate Intangibles Research and Development Manual and Chapter 6A CTA 2009 S104N and 140

  • L10 - R&D expenditure on which RDEC is claimed in this accounting period (Insert the amount of expenditure which qualifies for RDEC during this accounting period and on which RDEC is claimed.)
  • L15 - RDEC claim for this accounting period (Insert the amount of the total RDEC claim before any discharges, surrenders etc.)
  • L20 - Amounts from a previous accounting period treated as RDEC for this accounting period (Insert the amount of RDEC which is brought forward from earlier accounting periods (for example due to s104N(2) step 2 or step 3 CTA 2009 restrictions) where that RDEC has still not been used to discharge a liability or paid to the company.)
  • L25 - Total RDEC for the accounting period (This equals the sum of boxes L15 and L20.)
  • L30 - Corporation Tax liability (The entry in this box should equal the entry in box 475 on the form CT600.)
  • L35 - Income Tax deducted from profits (applicable to Corporation Tax liability) Enter the element of income tax deducted from gross profits and shown in box 515 which needs to be set against the corporation tax liability at box 475.
    This will be the full amount if there is no other liability in boxes 480 to 505. If there are other liabilities in boxes 480 to 505, a fair and reasonable apportionment can be made between those liabilities and the box 475 liability, with only the liability which is apportioned against Box 475 being entered in box L35.
  • L40 - Maximum amount available for Step 1 set off (This equals box L30 minus box L35)
  • L45 - Amount of RDEC used to discharge Corporation Tax at Step 1 (This equals the lesser figure in boxes L25 and L40. If box L25 is not completed then enter ‘0.00’. Copy the figure from box L45 to box L195)

Step 2 - Calculation of notional tax charge

This step restricts the potential payable element and ensures that loss makers receive the same net benefit as profit makers (the credit being taxable). This is achieved by retaining a ‘notional’ tax such that the total cash benefit for all claimants is equal to the expenditure credit, net of tax at the main rate of corporation tax

Only complete Step 2 if you have RDEC remaining after completing Step 1

  • L50 - Step 1 balance carried forward to Step 2 (This equals box L25 minus box L45)
  • L55 - Corporation Tax charge on RDEC for this accounting period (Enter the amount in box L15 multiplied by the tax rate for this accounting period)
  • L60 - Total RDEC arising in this AP less Corporation Tax charge on the RDEC for this AP (This equals box L15 minus box L55)
  • L62 - RDEC arising in this AP less remaining Corporation Tax Liability at step 1
  • L65 - Step 2 restriction carried forward to next accounting period (This equals box L50 minus box L60. If box L60 exceeds box L50 enter ‘0.00’
    Copy the figure from box L65 to box L130)

Step 3 - Expenditure on R&D workers' PAYE and National Insurance Contributions

This step further restricts any payable element to the company’s total expenditure on R&D workers’ PAYE and NIC for the accounting period. The calculation of the capped credit for R&D workers’ PAYE and NIC is set out at CIRD89790 and CIRD89800.

Only complete Step 3 if you have RDEC remaining after completing Step 2

  • L70 - Step 2 balance carried forward to Step 3 (This equals box L50 minus box L65)
  • L75 - Total relevant expenditure on R&D workers’ PAYE and National Insurance contributions (Enter the amount of expenditure)
  • L80 - Step 3 restriction carried forward to next AP (This equals box L70 minus box L75. If box L75 exceeds box L70 enter ‘0.00’.) (Copy the figure from box L80 to box L145)

Step 4 - RDEC to be offset against outstanding Corporation Tax liabilities

Any amount remaining after step 3 is used to discharge any outstanding corporation tax liabilities (due but not settled) of the company for any other accounting periods.

  • L85 - Step 3 balance carried forward to Step 4 (This equals box L70 minus box L80.)
  • L90 - Amount used to discharge Corporation Tax liability of another accounting period (The figure can't exceed the figure in box L85.)

Step 5 - Amount surrendered to Group member

If the company is a member of a group it may surrender the whole or any part remaining after step 4 to any other group member, see CIRD89810

  • L95 - Step 4 balance carried forward to Step 5 (This equals box L85 minus box L90.)
  • L100 - Credit surrendered to group member (The figure can't exceed the figure in box L95. Copy the figure from box L100 to box L160)

Step 6 - Amount used to discharge other company liabilities

Any amount remaining after step 5 is used to discharge any other liability of the company to pay a sum to the Commissioners, for example VAT or liabilities under any contract settlement.

  • L105 - Step 5 balance carried forward to Step 6 (This equals box L95 minus box L100.)
  • L110 - Amount used to settle other company liability on this Corporation Tax Self Assessment (Enter amount used to discharge liability on the return that is not corporation tax but treated as such. e.g. Bank levy, CFC tax, tax on loans to participators etc.) (Copy the figure from box L110 to box L200.)
  • L115 - Amount used to discharge any other company Liability (Enter amount used to discharge other liability outside Corporation Tax. e.g. PAYE, VAT etc. The figure can’t exceed box L105 minus box L110.)
  • L120 - Total used to discharge other company Liability (This equals the sum of box L110 and box L115.)

Step 7 - Payable Research and Development expenditure credit (RDEC)

The final amount remaining is payable to the company provided that the company is a going concern, see CIRD81130.

  • L123 - Amounts extinguished by s104S (2)(b) CTA 2009
  • L125 - Payable RDEC (box L105 minus sum of boxes L120 and L123) (copy this figure to box 880 on form CT600)

RDEC carried forward

  • L129 - Pre-step 1 restriction
  • L130 - Step 2 restriction (This equals box L65)
  • L135 - Surrendered to other group company (Copy the figure from box L135 to box L155)
  • L140 - Balance carried forward to next accounting period (AP) (This equals boxes L129 and L130 minus box L135.)
  • L145 - Step 3 restriction (This equals box L80)
  • L150 - Total carried forward to next AP (This equals the sum of box L140 and box L145.)

RDEC surrendered

  • L155 - Step 2 restriction surrendered (This equals box L135)
  • L160 - Step 5 Credit surrendered to group member (This equals box L100)
  • L165 - Total surrendered (This equals the sum of box L155 and box L160.)

Small and medium-sized enterprise (SME) R&D

Guidance on SME relief can be found at CIRD90000. The SME scheme legislation is in the Corporation Tax Act 2009 s1039.

  • L166 - R&D expenditure
  • L167 - Does the exception at s1058D CTA 2009 apply?
  • L167A - Total expenditure on externally provided workers from, and subcontracting to, connected persons
  • L168 - PAYE/NIC’s for which the company is liable in this accounting period
  • L168A - Employer PAYE reference (if there are additional references continue on page 6)
  • L169 - Relevant PAYE/NIC’s liability of connected companies
  • L169A - Connected company’s employer PAYE reference (if there are additional references continue on page 6)
  • L170 - SME R&D payable tax credit claim for this accounting period (Guidance in respect of payable tax credits can be found at CIRD90500)
  • L175 - SME R&D payable tax credit set-off against other liabilities on this return Enter the amount of SME credit that is being set off against other liability in boxes 480 to 505 on form CT600. (The figure cannot exceed the figure in box L170. Copy the figure from box L175 to box L205.)
  • L180 - SME R&D balance payable tax credit (This equals box L170 minus box L175.)
  • L185 - SME RDEC claim from work subcontracted to it by a large company (Guidance in respect of work contracted to an SME can be found at CIRD89740 and CIRD89750 The total RDEC claimed under sections 104C-104E CTA 2009 should be included here.)
  • L190 - SME RDEC claim from subsidised and capped work (Guidance in respect of subsidised qualifying expenditure SME can be found at CIRD89740 and CIRD89760) (The total RDEC claimed under sections 104F-104I CTA 2009 should be included here.)

Total R&D set off against liabilities in this Corporation Tax Return

  • L194 - RDEC pre-step 1 discharge amount
  • L195 - RDEC Step 1 discharge amount (This equals box L45)
  • L200 - RDEC Step 6 discharge amount for this accounting period (This equals box L110)
  • L205 - SME R&D payable tax credit used to discharge other liabilities on this return (This equals box L175)
  • L210 - Total (This equals the sum of boxes L194, L195, L200 and L205.) (Copy the figure from box L210 to box 530 on the form CT600.)

HMRC have provided following Company tax return guide to form CT600 (2022) Version 3 for accounting periods starting on or after 1 April 2015 to assist Companies complete the Corporation tax returns. Further information can also be found on GOV.UK website.

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