Corporation Tax Act 2010 section 499

Section 496(1)(d): accounting period in which certain expenditure treated as incurred

Section 499 determines the accounting period in which expenditure linked to commitments made by a charitable company is treated as incurred, for the purposes of the non-charitable expenditure restrictions under section 496(1)(d).

• The rule applies to expenditure arising from commitments (contractual or otherwise) entered into before or during an accounting period.
• Expenditure is treated as incurred in the accounting period in which it would need to be recognised if accounts were prepared for that period under UK generally accepted accounting practice (UK GAAP).
• This ensures that the timing of expenditure for the non-charitable expenditure test follows the same accruals-based approach used in standard financial reporting.
• The rule prevents charitable companies from manipulating the timing of expenditure recognition to avoid the restrictions on non-charitable spending.