Income and Corporation Taxes Act 1988

75 Expenses of management: investment companies. U.K.

(1) M1 In computing for the purposes of corporation tax the total profits for any accounting period of an investment company resident in the United Kingdom there shall be deducted any sums disbursed as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing profits apart from this section.

(2) For the purposes of subsection (1) above there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income, [F1 foreign income dividends,] group income and any regional development grant. In this subsection “regional development grant” means a payment by way of grant under Part II of the M2 Industrial Development Act 1982.

(3) M3 Where in any accounting period of an investment company the expenses of management deductible under subsection (1) above, together with any charges on income paid in the accounting period wholly and exclusively for purposes of the company’s business, exceed the amount of the profits from which they are deductible—

(a) the excess shall be carried forward to the succeeding accounting period; and

(b) the amount so carried forward to the succeeding accounting period shall be treated for the purposes of this section, including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period.

(4) For the purposes of this section there shall be added to a company’s expenses of management in any accounting period the amount of any allowances falling to be made to the company for that period by virtue of [F2 section 28 of the 1990 Act (capital allowances for investment F3 . . . companies)] in so far as effect cannot be given to them under subsection (2) of that section.

(5) M4 Where an appeal against an assessment to corporation tax or against a decision on a claim under section 242 relates exclusively to the relief to be given under subsection (1) above, the appeal shall lie to the Special Commissioners, and if and so far as the question in dispute on any such appeal which does not lie to the Special Commissioners relates to that relief, that question shall, instead of being determined on the appeal, be referred to and determined by the Special Commissioners, and the Management Act shall apply as if that reference were an appeal.

[F4 (6) In this section “foreign income dividends” shall be construed in accordance with Chapter VA of Part VI.]

Textual Amendments

F1 Words in s. 75(2) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 12(2)

F2 1990(C) s.164and Sch.1 para.8(4).Previously

“section 306 of the 1970 Act (capital allowances for machinery and plant)”.

F3 Words in s. 75(4) repealed (with effect in accordance with Sch. 8 para. 57(1) of the repealing Act) by Finance Act 1995 (c. 4), Sch. 8 para. 23(2), Sch. 29 Pt. 8(5), Note 2 (with Sch. 8 para. 55(2))

F4 S. 75(6) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 12(3)

Modifications etc. (not altering text)

C1 See the following sections of this Act:—s.77—incidental costs of obtaining loan finance.s.78—incidental costs in securing acceptance of bills of exchange by banks.s.79—contributions to approved local enterprise agencies on or after 1April 1982and before 1April 1992.s.85—profit sharing schemes.s.86—expenditure incurred in relation to employees seconded to charities; and, from 26November 1986to 31March 1997,educational establishments.s.88—sums paid to Export Credits Guarantee Dept. under investment insurance schemes.s.90—additional payments to redundant employees.s.242(2)—set-off of losses, etc., against franked investment income.s.403—group relief.s.468—application to authorised unit trusts.s.573—losses on unquoted shares in trading companies allowed before charges against income of investment companies.s.577—exclusion of certain entertaining expenses.s.579—inclusion of statutory redundancy payments.s.586—disallowance of deductions for war risk premiums.s.587—disallowance of certain payments in respect of war injuries to employees.s.588—relief for costs of training incurred on or after 6April 1987.s.592—inclusion of employer's contribution under exempt approved retirement benefits schemes.s.779—limitation on reliefs: land sold and leased back.s.780—land sold and leased back: relief in respect of rent under new lease.s.834—definitions of “profits” and “trade” in s.6(4)to apply for purposes of s.75.

C2 S. 75(3)(b) modified by S.I. 1992/1655, reg. 3G (as inserted (10.8.1995) by The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 1995 (S.I. 1995/1916), reg. 4)

C3 See—1988(F) s.73(3)—sums in connection with restrictive undertakings paid on or after 6June 1988.1989 s.44for periods of account ending after 5April 1989involving emoluments.1989 s.67—employee share ownership trusts.1989 s.76—non-approved retirement benefit schemes.1989 ss.86-87—changes in respect of insurance companies.

Marginal Citations

M1 SOURCE-1970 s. 304(1); 1984 s. 54(2)(b); 1987 s. 41

M2 1982 c. 52.

M3 SOURCE-1970 s. 304(2), (3)

M4 SOURCE-1970 s. 304(4)