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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Wholly and exclusively: companies: take-over bids: expenses recharged to trading subsidiaries

S54 Corporation Tax Act 2009

Consider the costs in the context of the trade actually conducted

It is important to consider the recharged expenditure in the context of the trade actually carried on by the subsidiary in question.

Is it plausible that the directors’ sole purpose in making the payment was to protect that company’s trade? Is there anything to suggest the trade was more or less threatened than those of other group members?

Only if the directors’ sole purpose was to protect that company’s trade may the payment be allowable.