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Amendment of Chapter 2 of Part 29 of Principal Act (scientific and certain other research)
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34. (1) Chapter 2 of Part 29 of the Principal Act is amended—
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(a) in section 766, by the substitution of the following subsection for subsection (1A):
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“(1A) For the purposes of this section and section 766C—
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(a) where expenditure is incurred by a company on machinery or plant which qualifies for any allowance under Part 9 and the machinery or plant will not be used by the company wholly and exclusively for the purposes of research and development, the amount of the expenditure attributable to research and development shall be such portion of that expenditure as is just and reasonable, and such portion of the expenditure shall be treated for the purposes of subsection (1)(a) as incurred by the company wholly and exclusively in carrying on research and development activities, and
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(b) where, at any time, the apportionment made under paragraph (a), or a further apportionment made under this paragraph, ceases to be just and reasonable, then—
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(i) such further apportionment shall be made at that time as is just and reasonable,
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(ii) any such further apportionment shall supersede any earlier apportionment, and
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(iii) any such adjustments, assessments or repayments of tax shall be made as are necessary to give effect to any apportionment under this subsection.”,
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(b) in section 766A, by the substitution of the following subsection for subsection (9):
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“(9) (a) A claim shall not be made under this section in respect of relevant expenditure incurred in an accounting period that commences on or after 1 January 2023.
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(b) A company may, in respect of relevant expenditure incurred in an accounting period, make a claim under this section or section 766D.”,
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(c) in section 766C—
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(i) in subsection (1), by the substitution of “30 per cent” for “25 per cent”,
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(ii) in subsection (6)(a)(i), by the substitution of “€50,000” for “€25,000”,
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(iii) by the insertion of the following subsection after subsection (7):
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“(7A) Where a company (in this section and section 766D referred to as the ‘predecessor’) which has made a claim in accordance with this section ceases to carry on a trade which includes the carrying on by it of research and development activities and another company (in this section and section 766D referred to as the ‘successor’) commences to carry on the trade and those research and development activities (the cessation and commencement referred to in this section and section 766D as the ‘event’) and—
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(a) both the predecessor and successor were, at the time of the event, members of the same group of companies within the meaning of section 411(1), and
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(b) on or at any time within 2 years after the event the trade and the research and development activities are not carried on otherwise than by the successor,
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then the successor may, to the extent that the predecessor has not, in respect of each instalment referred to in subsection (6), specified that the amount of the instalment, or any portion of that amount, is to be treated as an overpayment of tax in accordance with subsection (7)(a) or paid to the company in accordance with subsection (7)(b), be entitled to such amount that the predecessor would have been entitled to under subsections (1) and (6).”,
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(iv) in subsection (8), by the substitution of “for the purposes of corporation tax” for “for any tax purpose”,
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(v) in subsection (9)(b)—
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(I) in subparagraph (i), by the deletion of “and” where it occurs after “development activities”,
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(II) in subparagraph (ii), by the substitution of “period concerned, and” for “period concerned.”, and
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(III) by the insertion of the following subparagraph after subparagraph (ii):
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“(iii) amounts claimed under section 766(2), which are carried forward by the company in accordance with section 766(4) (referred to in section 766(4) as ‘the excess’), excluding amounts claimed in accordance with section 766(4B), and which may be treated as an amount by which corporation tax of the succeeding accounting periods may be reduced.”,
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(vi) by the insertion of the following subsections after subsection (15):
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“(16) Nothing in this section shall prevent the Revenue Commissioners from examining a claim subsequent to any payment or offset having been made and making or amending an assessment, as the case may be, under Chapter 5 of Part 41A.
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(17) (a) The company shall notify the Revenue Commissioners in writing, on or before the relevant date, in a form prescribed by the Revenue Commissioners, of the intention of the company to make a claim under this section and the prescribed form shall contain such particulars in relation to the claim as may be specified in the prescribed form including—
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(i) the name, address and corporation tax number of the company,
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(ii) a description of the research and development activities carried out by the company,
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(iii) the number of employees carrying on research and development activities, and
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(iv) details of expenditure incurred by the company on research and development activities which has been or is to be met directly or indirectly by grant assistance or any other assistance referred to in section 766(1)(b)(v).
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(b) The Revenue Commissioners may require the company to provide such additional information, explanations, and particulars and to give all assistance which may reasonably be required for the purpose of inspecting the information required to be delivered under this subsection.
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(c) Paragraph (a) shall not apply where the company has made a claim under this section or section 766 in respect of any of the 3 immediately preceding accounting periods.
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(d) In paragraph (a), ‘relevant date’ means the date which is 90 days before the claim under subsection (1) shall be made.”,
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(d) in section 766D—
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(i) in subsection (1), by the substitution of “30 per cent” for “25 per cent”,
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(ii) by the insertion of the following subsection after subsection (3):
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“(3A) Where an event referred to in section 766C(7A) occurs and—
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(a) in connection with the event the predecessor transfers to the successor a building or structure in respect of which—
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(i) the predecessor had made a claim under this section,
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(ii) the transfer is a transfer to which section 617 applies, and
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(iii) at the time of the transfer either or both the specified relevant period and the specified time had not expired,
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(b) on, or at any time within 2 years after, the event, the trade and research and development activities are not carried on otherwise than by the successor, and
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(c) the building or structure in respect of which relevant expenditure was incurred by the predecessor—
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(i) in a case where the specified relevant period had not expired, would continue to be a qualifying building if a reference, in the definition of ‘qualifying building’ in section 766A(1)(a), to activities carried on by the company were construed as a reference to activities carried on by the company and the successor, and
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(ii) continues to be used by the successor throughout the remainder of the specified time for the purposes of research and development activities,
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then—
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(I) the charge to tax as provided for in subsection (3) shall not apply in relation to the transfer by the predecessor,
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(II) the successor may, to the extent that the predecessor has not, in respect of each instalment referred to in subsection (5), specified that the amount of the instalment, or any portion of that amount, is to be treated as an overpayment of tax in accordance with subsection (6)(a) or paid to the company in accordance with subsection (6)(b), be entitled to such amount that the predecessor would have been entitled to under subsections (1) and (5), and
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(III) subsection (3) shall have effect as if references to the company in that subsection were references to the successor.”,
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(iii) in subsection (7), by the substitution of “for the purposes of corporation tax” for “for any tax purpose”,
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(iv) by the insertion of the following subsection after subsection (8):
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“(8A) The company shall, when making a claim in accordance with subsection (8), provide details of amounts which are carried forward by the company in accordance with section 766A(4), being amounts which have not been used to reduce the corporation tax of an accounting period in accordance with section 766A(2) (referred to in section 766A(4) as ‘the excess’), excluding amounts claimed in accordance with section 766A(4B), and which may be treated as an amount by which corporation tax of the succeeding accounting period may be reduced.”,
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(v) by the insertion of the following subsections after subsection (14):
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“(15) Nothing in this section shall prevent the Revenue Commissioners from examining a claim subsequent to any payment or offset having been made and making or amending an assessment, as the case may be, under Chapter 5 of Part 41A.
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(16) (a) The company shall notify the Revenue Commissioners in writing, on or before the relevant date, in a form prescribed by the Revenue Commissioners, of the intention of the company to make a claim under this section and the prescribed form shall contain such particulars in relation to the claim as may be specified in the prescribed form including—
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(i) the name, address and corporation tax number of the company,
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(ii) confirmation that the building or structure is a qualifying building,
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(iii) the proportion of the qualifying building which is to be used for the purpose of the carrying on by the company of research and development activities within the meaning of section 766(1)(a) for the specified relevant period, and
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(iv) details of expenditure incurred by the company which has been or is to be met directly or indirectly by grant assistance or any other assistance referred to in section 766A(1)(b)(i).
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(b) The Revenue Commissioners may require the company to provide such additional information, explanations, and particulars and to give all assistance which may reasonably be required for the purpose of inspecting the information required to be delivered under this subsection.
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(c) Paragraph (a) shall not apply where the company has made a claim under this section or section 766A in respect of any of the 3 immediately preceding accounting periods.
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(d) In paragraph (a), ‘relevant date’ means the date which is 90 days before the claim under subsection (1) shall be made.”.
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(2) (a) Subject to paragraphs (b), (c) and (d), subsection (1) shall apply in respect of accounting periods commencing on or after 1 January 2024.
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(b) Subsection (1) (b) shall be deemed to have applied on and from 15 December 2022.
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(c) Paragraphs (c) (v) and (d) (iv) of subsection (1) shall apply in respect of accounting periods ending on or after 31 December 2023.
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(d) Paragraph (c) (vi) (in so far as it inserts subsection (16) in section 766C of the Principal Act) and paragraph (d) (v) (in so far as it inserts subsection (15) in section 766D of the Principal Act) of subsection (1) shall apply on and from the date of the passing of this Act.
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