Budget 2014 – Targeted anti-avoidance loss buying rules: exclusion of research and development allowances (RDAs)

Finance Act 2013 introduced new rules which are contained in Part 14A CTA 2010, which restrict the circumstances in which unrealised losses can be set off against other profits where there has been a ‘qualifying change’ in relation to a company, including a change in ownership.

Representations were made by businesses following the introduction of these provisions, because they catch situations where a company does preliminary capital work in the furtherance of research and development, but does not reach the point of trading before it is sold on to a trading group.

Legislation will be introduced to allow RDAs to be claimed following a change in ownership for genuine commercial reasons. This will be through amendment of the definition of deductible amounts in section 703B, CTA 2010, to exclude expenditure that crystallises as RDAs.

There will be no amendments to the RDA rules themselves.

These changes will remove an unintended adverse effect on the availability of RDAs.