Corporation Tax Act 2010 section 516

Rules for attributing excess expenditure to earlier periods

Section 516 sets out the rules for how a charitable company's excess non-charitable expenditure from one accounting period is allocated back to earlier accounting periods under section 515.

• Excess expenditure can only be carried back to earlier periods that end within 6 years before the end of the period in which the excess arises, and only where the earlier period has sufficient surplus income and gains over non-charitable expenditure.
• Where more than one earlier period qualifies, the excess expenditure must be attributed to the most recent qualifying period first, working backwards in time.
• The amount attributed to any earlier period cannot exceed the surplus of available income and gains over non-charitable expenditure for that period.
• When calculating whether an earlier period has sufficient surplus, any excess expenditure already attributed to that period from a separate carry-back operation must be taken into account, but the current attribution being considered is ignored.