CTM08005 | Corporation Tax: management expenses: introduction

CTA09/PART16

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 CTA09/S1218B;

• 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, CTA09/S1219 (3)(b);

• There is no relief where assets are held for an unallowable purpose CTA09/S1219 (2)(b) and S1220;

• There is a targeted anti-avoidance rule (TAAR), CTA09/S1248;

• The timing of the relief broadly follows the accounts, CTA09/S1224;

• Where a company receives a credit for sums that have previously been allowed as management expenses, that credit can be charged to CT, CTA09/S1229;

• 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 FA12/PART2/CHAPTER1.

The legislation was rewritten and consolidated in CTA09. 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.