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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: reversals

CTA09/S1228 to S1231

As the timing of relief for the expenses of management incurred now follows the accountancy treatment (CTM08560) it was necessary to make provision to recoup relief where the debit for an expense of management is reversed in the accounts of a subsequent period.

Where a sum debited in the accounts has been allowed as an expense of management and the accounting entry is reversed in the accounts of a later period, an adjustment is made under CTA09/S1229 if the relief has not been already recovered under some other provision.  The adjustment should be made for the most part in the accounting period in which the accounts reversal takes place, though there are detailed rules for less straightforward cases.

The adjustment should first reduce the management expenses available for the period, but not below nil.  Any excess should be charged as a receipt chargeable under the charge to corporation tax on income for that period.