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HMRC internal manual

Business Income Manual

Specific deductions: administration: company share costs etc.

Costs incurred by a company to effect changes in its status, for example flotation costs, the initial charges of a Stock Exchange quotation, expenses connected with a purchase of own shares (see BIM46400 onwards and in particular BIM46425 and BIM46460) will not normally be deductible on the grounds that they are:

  • capital (for general guidance see BIM35000 onwards), and/or
  • there is a non-trade purpose in incurring the expense (see BIM42105).

But no objection should normally be raised to the deduction of ordinary annual expenditure on such matters as the keeping of the company’s share register, the printing of annual accounts, and the holding of shareholders’ annual general meetings as trading expenses.

On the same basis, the annual cost of a Stock Exchange quotation and the fees paid to newspapers for the inclusion of the company’s shares in the newspaper’s report of Stock Exchange prices should be treated as allowable expenses.

Annual fees paid to trustees for debenture holders or mortgagees should be similarly allowed.

On the other hand, expenditure incurred by a company for the purpose of preventing a change in the identity of the shareholders is not allowable. For more on take-over bids see BIM38260 onwards.

As regards the cost of valuations made for the purpose of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, SI 2008 No 410, Schedule 7 Paragraph 2; see BIM42540.