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CTA09/S1223

Carry forward of expenses

Management expenses, qualifying charitable donations and amounts brought forward as management expenses that are not relieved in full in the accounting period (AP)  in which they arise are carried forward and are treated as management expenses of the next AP.  Excess management expenses cannot be carried back.

Amounts brought forward as management expenses:

• Must not have been claimed in full for offset (CTA09/1223 (1)(b)(i)).  (For APs beginning before 1 April 2017, no claim was required);
• Are subject to loss restriction rules relating to restrictions on deductions from total profits under CTA10/S269ZD (3), see ; and
• Are amounts restricted for banking companies under CTA10/S269CC.

The conditions for carrying forward the expenses are

• the expenses have not been surrendered as group relief or group relief for carried-forward losses under CTA10/PART5 or CTA10/PART5A (CTA09/S1223 (3A)), and
• the company must continue to carry on the investment business in the next AP (CTA09/S1219 (1)).

From 1 April 2017, the priority rule in CTA09/S1219 (1A), see , no longer applies in relation to management expenses carried forward so that it is not necessary to allow a deduction for carried-forward management expenses before other deductions from total profits (CTA09/S1223 (3E)).

CTA09/S1223 (3B) to (3D)

Claims

A company must make a claim to set carried-forward management expenses against total profits.  This can be for the whole or part of the management expenses.

The claim must be made within two years of the end of the period in which the company wishes to set off the management expenses, or such further period as HMRC allows.  Subject to this time limit, the general rules for claims under CTSA described at onwards apply.

CTA10/S99 and S103 and CTA10/S188BB (1)

Group relief

Where the company is a member of a group, excess management expenses arising in the AP in which they were incurred may be surrendered as group relief. 

Before 1 April 2017, amounts brought forward from an earlier accounting period could not be group relieved.  From 1 April 2017, carried forward management expenses (excluding qualifying charitable donations) incurred on or after 1 April 2017 may be available for group relief for carried-forward losses under CTA10/S188BB, see .