Jurisdiction(s):
United Kingdom

Court of Appeal (Civil Division) upholds UT: UURBS provision not deductible; 'wholly and exclusively' focuses on object not effect; tax-avoidance motive defeats CTA 2009 s54 relief (England and Wales)

Published on: 27 November 2025

Published by a LexisNexis Pensions expert

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Article summary

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 benefit does not of itself render the expenditure disallowable (Vodafone Cellular v Shaw (Inspector of Taxes) [1997] STC 734 at...

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