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HMRC internal manual

Business Income Manual

Deductions: general: interaction between prohibitive and permissive rules

S31 Income Tax (Trading and Other Income) Act 2005, S51 Corporation Tax Act 2009

In general, rules which permit a deduction take priority over rules which prohibit a deduction.

The following prohibitive rules, however, take priority over permissive rules.

Income Tax (Trading and Other Income) Act 2005 section Corporation Tax Act 2009 section Prohibitive rule Further guidance
36 1288 Unpaid remuneration BIM47130 onwards
38 1290 Employee benefit contributions BIM44500
48 56 Car hire BIM47780 onwards
55 1304 Crime-related payments BIM43100 onwards

‘Prohibitive rule’ extends, for this purpose, beyond the list of provisions at BIM42060 to include any provision relating to the calculation of trade profits which might be read as prohibiting or restricting the amount of a deduction.