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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: targeted anti-avoidance rule (TAAR) - outlying provisions

Various provisions of the Taxes Acts deem or treat particular expenses as expenses of management. Where amounts are simply deemed to be or are treated as expenses of management within ICTA88/S75(1) then the remaining provisions of ICTA88/S75 (e.g. capital exclusion), including the new Section 75(2A) automatically apply to the expenditure.

Other provisions of the Taxes Acts state that certain expenditure is deductible as expenses of management. New ICTA88/S75(2C) ensures that these expenses are also subject to the TAAR in Section 75(2A).

Certain Manufactured Payments are deemed to be expenses of management by ICTA88/Schedule 23A/PARA4(1A)(b). Schedule 23A already contains its own unallowable purpose rule. ICTA88/S75(2B) ensures that that specific unallowable purpose provision (ICTA88/SCH23A/PARA7A) continues to apply in priority to ICTA88/S75(2A). That is not to say that Section 75(2A) cannot apply, it will only apply in appropriate circumstances where ICTA88/SCH23A does not. ICTA88/S75(4) and (5) do however have priority over Schedule 23A, so the order is ICTA88/S75(4) & (5), then ICTA88/SCH23A/PARA7A and then if necessary ICTA88/S75(2A)).