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HMRC internal manual

Business Income Manual

Specific deductions: professional fees: in connection with equity finance

Capital and so disallowed

Fees incurred in connection with raising, repaying or rearranging equity capital, including the purchase of own shares, are capital, see Thompson (Archibald) Black & Co Ltd v CIR [1919] 7 TC 158. Expenses connected with the purchase by a company of its own shares are normally also not deductible because the purchase is partly for the purposes of the shareholders and so the expenditure fails the ‘wholly and exclusively’ test.