JT Dove Ltd v HMRC

In JT Dove Ltd v HMRC (TC00893 – 17 January) a company (J) appealed against a corporation tax assessment for the accounting period ending December 1997 contending that it was entitled to a deduction for a payment of £3 000 000 to an employee benefit trust The First-Tier Tribunal rejected this contention and dismissed the appeal. Applying the principles laid down by the HL in Dextra Accessories Ltd & Others v MacDonald [2005] STC 1111 the payment was a ‘potential emolument’ and could therefore only be deducted from taxable profits if it was paid within nine months of the end of the accounting period in which the deduction was claimed.

Why it matters: CTA 2009 s 1290 provides that ‘employee benefit contributions’ are not deductible for corporation tax purposes unless ‘qualifying benefits are provided or qualifying contributions are paid...