Corporation Tax Act 2010 section 666

Exemptions reduced if non-qualifying expenditure incurred

Section 666 explains how the tax exemptions available to a registered community amateur sports club are reduced or removed when the club spends money on purposes that do not qualify for relief.

• Where a club's non-qualifying expenditure is less than its total income receipts and chargeable gains, its exemptions are proportionally reduced using a formula based on the ratio of non-qualifying expenditure to total income and gains.
• Where non-qualifying expenditure equals or exceeds total income receipts and chargeable gains, all exemptions for that accounting period are completely removed and treated as never having applied.
• Where non-qualifying expenditure exceeds total income receipts and chargeable gains, the excess (the surplus amount) is carried back to reduce exemptions granted in previous accounting periods, but not below nil.
• The formula for calculating the reduction is: total relevant income and gains multiplied by (non-qualifying expenditure divided by total income receipts and chargeable gains).