Corporation Tax Act 2009 section 1229

Claw back of relief

Section 1229 deals with the clawback of management expense relief when a credit arises in a company's accounts that reverses a debit previously deducted as management expenses.

• Where a credit reverses a previously deducted management expense debit, the reversal amount must be clawed back — first by reducing current period management expenses, and any excess treated as taxable income
• The clawback only applies to management expenses that were deducted in the period they arose, not to expenses that were carried forward from an earlier period
• If the period of account in which the credit arises does not coincide with an accounting period, the reversal amount is apportioned between the accounting periods falling within that period of account
• Apportionment is made on a time basis, unless that method would produce an unreasonable or unjust result, in which case a just and reasonable basis is used instead