Expense deductions meaning

A D Bly Groundworks and Civil Engineering Ltd and another v Revenue and Customs Commissioners [2025] EWCA Civ 1443 What are the practical implications of this case? The CA confirmed that the proper way to decide if expenditure is incurred wholly and exclusively for the purposes of the trade is to apply established authorities. The principles are as follows. Because the taxpayer’s “object” in making the outlay must be identified, it follows that—save in plain cases—the First-tier Tribunal (FTT) should examine the taxpayer’s state of mind at the time the cost is incurred (Lord Brightman in Mallalieu v Drummond (Inspector of Taxes) [1983] 2 All ER 1095 at 1100, [1983] STC 665 at 669, [1983] 2 AC 861 at 870 (Mallalieu)). In conducting that inquiry, the object of the spending must be kept separate from its effects. Where the sole object was to advance the business, the expense is deductible even if it inevitably carries other consequences. Accordingly, the presence, for example, of a private...

Does the new returns tool unlawfully penalise consumers for exercising their right to return items? The consumer–trader relationship sits under the Consumer Rights Act 2015 (CRA) and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs). Under the CCRs, individuals who enter contracts by distance means (for instance, online) enjoy a right to cancel a retailer contract. In particular, a shopper may cancel an online purchase at any point within the cancellation window, although this can be subject to enhanced delivery charges, deductions for any use, the expense of sending goods back, and the price of any services supplied during that window. Ordinarily, the period for cancelling is 14 days (though some businesses do allow longer return timeframes). When a cancellation is made, the retailer must return any sums paid by the customer, including standard delivery charges (but excluding any enhanced delivery costs). As for the ASOS fees, ASOS can lawfully require customers to cover the cost of returning items, provided this was communicated before the contract...

The appeals commission, in its ruling of 13 December 2023, determined that the royalty levy was not a charge on profits and therefore represented a cost of carrying on business within the relevant jurisdiction. Consequently, it concluded the company ought not to have borne a €5m tax charge. The TAC withheld the appellant’s identity, describing it as a company incorporated in Ireland and resident for tax there. According to the decision, the company worked closely with licensees in other countries to distribute its products. Those licensees applied royalty withholding to sales proceeds, consistent with local withholding requirements. The company treated the amounts as a deductible business expense, contending...

Companies subject to corporation tax may set qualifying charitable donations (QCDs) against total profits once all other reliefs have been claimed, except group relief and group relief for carried‑forward losses, allowing profits to be reduced to nil. Any surplus QCDs lapse unless the company has an investment business. Investment businesses may deduct management expenses from total profits, and this deduction must be taken before any other deductions from total profits. Unused management expenses can be carried forward to the next accounting period and set against that period’s total profits or, for losses arising on or after 1 April 2017, surrendered for group relief. Where there are excess QCDs, they can be carried forward as management expenses, but cannot be surrendered for group relief for carried‑forward losses. For accounting periods beginning on or after 1 April 2024, donations to non‑UK charities do not attract relief. Relief for qualifying charitable donations When a company makes a QCD in an accounting period, it...

This Practice Note provides a checklist in the form of a high-level summary of the key anti-avoidance rules that may apply to restrict the tax deductibility of loan interest for a corporate borrower within the charge to UK corporation tax. They include: the loan relationships regime-wide anti-avoidance rule (RAAR) the unallowable purpose rule the rules recharacterising interest as a distribution the corporate interest restriction the transfer pricing rules the hybrid and other mismatches rules non-market loans the general anti-abuse rule For these purposes, assume the borrower and lender are unrelated and deal strictly on a commercial arm’s length basis in relation to a bilateral or syndicated loan arrangement...

This Practice Note This Practice Note considers the key points to address when acting for an executive director (who will also be an employee) entering a service agreement and/or assessing a draft service agreement. It: is not intended for use when advising a non-executive director does not cover the particular issues arising where the company is regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) For an example service agreement, see Precedents: Executive service agreement or Executive service agreement (short form). The service agreement will, in almost all cases, have been produced by the employer and, accordingly, the wording will favour the employer. Where the draft reflects the employer’s standard terms for directors at an equivalent level, the employer is unlikely to accept material alterations, save to capture the specific package settled with the director. The extent to which the director can effectively secure amendments to the employer’s draft will, inevitably, turn on the director’s relative negotiating strength,...

1 Introduction 1.1 This policy outlines the Company’s rules for claiming back travel, accommodation and other costs you incur while undertaking Company business. It also explains how to submit claims, the supporting evidence required, and the level of approval you must obtain. 1.2 This policy applies solely to employees. It does not cover agency workers, suppliers, consultants, contractors, volunteers, interns or casual workers. 1.3 The Company will repay all reasonable costs incurred in line with this policy. Any expenses claim that is dishonest, or breaches this policy, may result in disciplinary action. 1.4 This policy is not part of any employment contract and the Company may amend it at any time, for example to reflect changes in procedures or expense thresholds. You will be informed in writing of any amendments. 1.5 When reimbursing expenses, the Company will comply with its obligations regarding PAYE deductions for income tax and National Insurance contributions...