Bank compensation restriction: excluded expenses: overview
CTA09/S133D excludes expenses from being relevant compensation expenses where they fall into one of three categories:
- Administrative errors
- Failure of electronic systems
- Loss or damage attributable to an unconnected third party
The legislation also excludes issues which relate to a single error (CTA09/S133C(2)) where compensation is paid or payable to or for the benefit of one and only one customer. There is further guidance on this at BKM203500.
The legislation does not exclude from relevant compensation expenses any amount of compensation which is reduced by an insurance receipt, whether third party or internal to the group. The gross compensation expenditure should be disallowed in full and the normal rules will apply in considering the tax treatment of the insurance receipt (BIM40750).