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HMRC internal manual

Business Income Manual

Deductions - scope of: starting point

You cannot normally deduct expenditure in computing the profits of a business for Income Tax purposes if, either:

  1. it falls within the scope of any of the statutory prohibitions (see BIM42060), or
  2. it is not a proper debit item to be charged under generally accepted accounting practice against the incomings of the trade in computing the profits of that trade.


Usher’s Wiltshire Brewery Ltd v Bruce 6TC399   BIM37200
Atherton v British Insulated & Helsby Cables Ltd 10TC155   BIM35010
Morley v Lawford & Co 14TC229   BIM37780

The exception to this rule is where there is a statutory rule which permits a deduction, and that rule takes priority over any prohibitive rule which would otherwise apply. Permissive rules take priority over the exclusion of items not deductible in accordance with GAAP in all cases. See BIM42070 for a list of permissive rules and BIM42080 for the priority rules.