Finance Act 2002

Exemption reduced where club incurs non-qualifying expenditure U.K.

8 (1) This paragraph applies where—

(a) any of a club’s income or gains for an accounting period are exempted from tax under this Part (or would be so exempted but for this paragraph), and

(b) in that accounting period the club incurs expenditure for non-qualifying purposes.

(2) In this paragraph—

• A is the total amount of income and gains mentioned in sub-paragraph (1)(a);

• N is the amount of the expenditure mentioned in sub-paragraph (1)(b);

• T is the aggregate of—

• (a) the club’s income (whether taxable or not, and before deduction of any expenses) for the accounting period, and

• (b) the club’s gains that are chargeable gains, together with those that would be chargeable but for paragraph 7, for that period.

(3) Where N is less than T, the total amount of income and gains for the accounting period exempted under this Part is reduced to—

(4) Where N is equal to T, the total amount of income and gains for the accounting period exempted under this Part is reduced to nil.

(5) Where N is greater than T—

(a) the total amount of income and gains for the accounting period exempted under this Part is reduced to nil, and

(b) the surplus amount is carried back to previous accounting periods (taking later ones before earlier ones) and deducted from the amounts exempted under this Part for those periods, until it is exhausted.

In paragraph (b) “the surplus amount” means—

(6) The reference in paragraph (b) of sub-paragraph (5) to previous accounting periods is to accounting periods ending not more than six years before the end of the accounting period mentioned in paragraph (a) of that sub-paragraph.

(7) To the extent that an amount exempted under this Part has been reduced under sub-paragraph (3), (4) or (5) in respect of expenditure incurred for non-qualifying purposes in a particular accounting period, it may not be reduced again under sub-paragraph (5) in respect of expenditure so incurred in a later accounting period.

(8) All such adjustments shall be made, whether by way of assessment or otherwise, as may be required in consequence of sub-paragraph (5).

(9) Where by virtue of this paragraph there is an amount of a registered club’s income and gains for which relief under this Part is not available, the club may, by notice to the Inland Revenue, specify which items of the income and gains are, in whole or in part, to be attributed to that amount.

If, within 30 days of being required to do so by the Inland Revenue, a registered club does not give notice under this sub-paragraph, the items of its income and gains that are to be attributed to the amount in question shall be such as the Inland Revenue may determine.