CTM08300 - Corporation Tax: management expenses: raising finance
The expenses incurred by a company with investment business on obtaining business finance, meaning raising capital in the broad sense, whether in terms of loans, shares or other products, are not expenses of management within CTA09/S1219. The same principle applies to interest paid on loans.
The authority for these conclusions is variously in
- London County Freehold and Leasehold Properties Ltd v Sweet (1942) 24TC412,
- Hoechst Finance Ltd v Gumbrell (1983) 56TC594, and
- Bennett v Underground Electric Railway of London Ltd (1923) 8TC475.
There is useful discussion in Howden Joinery Group plc and another v HMRC [2014] UKFTT 257 (TC). Some relief may be provided under the loan relationships legislation in CTA09/PART5. For details of the loan relationships legislation see the HMRC Corporate Finance Manual (CFM30000 onwards).