Finance Act 1989

[F1 44 [F2Companies with investment business and insurance companies: computation]U.K.

[F3(1)For the purposes of corporation tax, in calculating for a period of account the profits of a company with investment business, an amount charged in the accounts in respect of employees' remuneration shall not be deductible under section 75 of the Taxes Act 1988 as expenses of management unless the remuneration is paid before the end of the period of 9 months immediately following the end of the period of account.]

(2)For the purposes of subsection (1) above an amount charged in the accounts in respect of employees' remuneration includes an amount [F4for which provision is made in the accounts] with a view to its becoming employees' remuneration.

(3)Subsection (1) above applies whether the amount is in respect of particular employments or in respect of employments generally.

(4)If the remuneration is paid after the end of the period of 9 months mentioned in subsection (1) above, any deduction allowed in respect of it is allowed for the period of account in which it is paid and not for any other period of account.

(5)If [F5the profits of the company] are calculated before the end of the period of 9 months mentioned in subsection (1) above—

(a)it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but

(b)if the remuneration is subsequently paid before the end of that period, the calculation is adjusted if a claim to adjust it is made to an officer of the Board by or on behalf of the company within 2 years beginning with the end of the period of account.

(6)For the purposes of this section, remuneration is paid when it—

(a)is treated as received by an employee for the purposes of the Income Tax (Earnings and Pensions) Act 2003 by section 18, 19, 31 or 32 of that Act (receipt of money and non-money earnings), or

(b)would be so treated if it were not exempt income.

[F6(7)This section shall apply in calculating the profits of a company in relation to which section 76 of the Taxes Act 1988 applies (companies carrying on life assurance business) as it applies in calculating the profits of a company with investment business; and in any such case—

(a)any reference in this section to an amount being deductible under section 75 of the Taxes Act 1988 as expenses of management shall be taken as a reference to an amount being brought into account under section 76 of that Act as expenses payable and references to a deduction shall be construed accordingly;

(b)subsection (4) above shall have effect subject to section 86 below, and

(c)in construing section 86 below the remuneration shall be treated as expenses payable for that period which fall to be included at Step 1 in section 76(7) of the Taxes Act 1988.]

(8)In this section—

• [F7“company with investment business” has the same meaning as in Part 4 of the Taxes Act 1988 (see section 130 of that Act),]

• “employee” includes an office-holder and “employment” correspondingly includes an office,

• F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “remuneration” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of the Income Tax (Earnings and Pensions) Act 2003.]