Corporation Tax Act 2010 section 699

Restrictions on the deduction of expenses of management

Section 699 restricts the deduction of management expenses and capital allowances for investment companies when there has been a change in company ownership, preventing pre-change expenses from sheltering certain post-change gains.

• Management expenses relating to the actual accounting period in which ownership changes must be split between two notional periods (before and after the change) and treated as belonging to the notional period to which they are allocated.
• Capital allowances must similarly be apportioned between the two notional periods, and each portion is treated as falling to be made in the notional period to which it is allocated.
• Where chargeable gains or non-trading chargeable realisation gains form part of total profits, management expenses or allowances from periods beginning before the ownership change cannot be deducted against the portion of profits representing those gains.
• The restriction applies specifically to investment companies claiming expenses of management under the CTA 2009 rules for companies with investment business.