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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: excess expenses and excess charges

Carry forward

Excess management expenses are to be carried forward and treated as management expenses of the next accounting period and this includes qualifying charitable donations. 

The provisions of FA98/SCH18/PARA88 apply and the amount of excess management expenses to be carried forward is determined either by the return or at the conclusion of an enquiry.

Group relief

Under CTA10/S99, a ‘company with investment business’ can surrender as group relief an excess of management expenses over its profits for the accounting period.  The management expenses must be those referable to the accounting period.  So any management expenses brought forward and treated as referable to that later accounting period should be excluded from the amount available for group relief.

To calculate the excess management expenses:

  • take the profits of the accounting period, without any deduction for losses or other allowances of any other accounting period, and
  • deduct from this the management expenses referable to that accounting period.

For an example of how to make the calculation, see CTM80445.