What does section 517 of the Corporation Tax Act 2010 do?

Section 517 requires that necessary tax adjustments are made to earlier accounting periods when excess non-charitable expenditure is attributed back to those periods under section 515. This may involve raising new assessments, recalculating interest charges, or making other corrections to ensure the correct amount of corporation tax is collected from the charity.

How are tax adjustments made under section 517 of the Corporation Tax Act 2010?

Adjustments under section 517 may be made by HMRC raising revised tax assessments for earlier periods or by any other appropriate method. The provision is deliberately broad in scope, permitting any type of adjustment — including recalculating interest due — so long as it arises as a consequence of section 515 applying to reallocate non-charitable expenditure.

What are the practical implications of section 517 for United Kingdom charities?

If a charity breaches non-charitable expenditure rules and section 515 reallocates expenditure to prior periods, those earlier periods are effectively reopened under section 517. The charity may face additional corporation tax bills together with associated interest for years it previously considered settled, correcting the tax position to reflect the reallocation.

What is the income tax equivalent of section 517 of the Corporation Tax Act 2010?

The income tax equivalent of section 517 is section 564 of the Income Tax Act 2007. Section 564 performs the same function for charitable trusts subject to income tax rather than corporation tax, enabling adjustments to earlier periods when excess non-charitable expenditure is reallocated under the corresponding income tax provisions.

Corporation Tax Act 2010 section 517

Adjustments in consequence of section 515

Section 517 requires that any necessary tax adjustments are made to earlier periods when excess non-charitable expenditure is attributed back to those periods under section 515.

When section 515 treats excess expenditure as non-charitable expenditure of earlier periods, consequential adjustments must follow
Adjustments may be made by raising assessments or by any other appropriate method
The adjustments can affect tax liabilities, interest charges, and other amounts for the earlier periods concerned
This ensures that the tax position for prior periods is corrected to reflect the reallocation of non-charitable expenditure under section 515

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