CTM08005 | Corporation Tax: management expenses: introduction
From HM Revenue & Customs · Company Taxation Manual
In 1915 (FA1915/S14) legislation provided investment companies and certain life insurance companies with tax relief for management expenses. The aim of the legislation was to put investment companies into a broadly similar position to trading companies. The statutory provisions remained essentially unchanged until 2004.
Changes have affected the following broad areas:
To be eligible for relief for expenses of management, a company must be a ‘company with investment business’, as defined in ;
The number of companies qualifying for relief for management expenses is now more extensive as the definition is less restrictive;
The statutory test states that relief is given for expenses of management of the investment business;
There is a specific exclusion for capital expenditure, ;
There is no relief where assets are held for an unallowable purpose and S1220;
There is a targeted anti-avoidance rule (TAAR), ;
The timing of the relief broadly follows the accounts, ;
Where a company receives a credit for sums that have previously been allowed as management expenses, that credit can be charged to CT, ;
Relief for the management expenses of insurance companies has been completely decoupled from that for other companies with investment business and is now to be found in .
The legislation was rewritten and consolidated in . The guidance which follows covers only the new legislation from 2004 in its rewritten form. Copies of previous guidance covering the pre-2004 legislation (and the application of the transitional provisions) can be obtained from BAI (Technical) along with details of the legislative references from 2004 to 2009.