ICTA88/S74 (1)(a) says that expenditure cannot be deducted in
computing trading profits unless it is incurred wholly and
exclusively for the purposes of the trade, profession or vocation.
The guidance that follows describes this statutory restriction.
A full list of the contents of the guidance on wholly &
exclusively is shown below. The guidance is subdivided into
sections, the opening page of each section being
bold in the list below. Please click on the page
number alongside to go direct to each section.
| BIM37005 | Topics covered |
| BIM37007 | Overview |
| BIM37010 | Statutory background: what the guidance covers |
| BIM37020 | Statutory background: legislative starting point |
| BIM37025 | Statutory background: expenses rule for employees |
| BIM37030 | Statutory background: tax is charged on the full amount of profits |
| BIM37035 | Statutory background: the statutory prohibition |
| BIM37040 | Statutory background: computation to accord with GAAP |
| BIM37045 | Statutory background: appeal to be on a point of law |
| BIM37050 | How to establish purpose |
| BIM37055 | How to establish purpose: whose purpose |
| BIM37060 | How to establish purpose: purpose is a question of fact |
| BIM37065 | How to establish purpose: a question of fact to be decided by examining the evidence |
| BIM37070 | How to establish purpose: objective or subjective test |
| BIM37075 | How to establish purpose: distinction between purpose and motive |
| BIM37100 | Case law |
| BIM37200 | Case law: remoteness |
| BIM37300 | Case law: the 'capacity' test |
| BIM37400 | Case law: incidental benefit |
| BIM37500 | Case law: subscriptions and donations |
| BIM37510 | Case law: subscriptions and donations: charitable gift to hospital |
| BIM37600 | Duality of, or non-trade, purpose: travel costs |
| BIM37605 | Duality of, or non-trade, purpose: travel costs: home to work |
| BIM37610 | Duality of, or non-trade, purpose: travel costs: overseas conference plus holiday |
| BIM37615 | Duality of, or non-trade, purpose: travel costs: overseas conference |
| BIM37620 | Duality of, or non-trade, purpose: travel costs: to and between sites |
| BIM37625 | Duality of, or non-trade, purpose: travel costs: overseas visit |
| BIM37630 | Duality of, or non-trade, purpose: travel costs: home to work by way of a supplier |
| BIM37635 | Duality of, or non-trade, purpose: travel costs: home to work: recent developments |
| BIM37650 | Duality of, or non-trade, purpose: non travel topics |
| BIM37660 | Duality of, or non-trade, purpose: non travel topics: subsistence |
| BIM37665 | Duality of, or non-trade, purpose: non travel topics: accommodation and subsistence |
| BIM37670 | Duality of, or non-trade, purpose: non travel topics: accommodation and subsistence: 'itinerant' trades |
| BIM37675 | Duality of, or non-trade, purpose: non travel topics: accommodation and subsistence: sub-contractors |
| BIM37680 | Duality of, or non-trade, purpose: non travel topics: interest payments |
| BIM37690 | Duality of, or non-trade, purpose: non travel topics: building society demutualisation |
| BIM37700 | Duality of, or non-trade, purpose: remuneration, etc |
| BIM37705 | Duality of, or non-trade, purpose: remuneration, etc: claim to deduct dividends paid to directors |
| BIM37707 | Duality of, or non-trade: remuneration, etc: ‘excessive’ remuneration: establish the purpose |
| BIM37715 | Duality of, or non-trade: remuneration, etc: paid to daughter |
| BIM37717 | Duality of, or non-trade, purpose: remuneration, etc: payment to retiring director following dispute |
| BIM37720 | Duality of, or non-trade, purpose: remuneration, etc: payment to director for changing duties because of ill-health |
| BIM37725 | Duality of, or non-trade, purpose: remuneration, etc: loss on sale of property used as a temporary residence by employee |
| BIM37730 | Duality of, or non-trade, purpose: remuneration, etc: payment of share of profits following sale of shares |
| BIM37735 | Duality of, or non-trade, purpose: remuneration, etc: wife or civil partner's wages |
| BIM37737 | Duality of, or non-trade, purpose: remuneration, etc: whether payments to minor children were allowable remuneration |
| BIM37740 | Duality of, or non-trade, purpose: remuneration, etc: 'excessive' remuneration: disallow the excess |
| BIM37745 | Duality of, or non-trade, purpose: remuneration, etc: premium to secure directors’ pension |
| BIM37750 | Duality of, or non-trade, purpose: loans/advances to others: whose trade purpose? |
| BIM37753 | Duality of, or non-trade, purpose: loans/advances to others: temporary loans made by brewer |
| BIM37755 | Duality of, or non-trade, purpose: loans/advances to others: advances to secure supply of raw material |
| BIM37760 | Duality of, or non-trade, purpose: loans/advances to others: advance to secure a 10-year supply of raw material |
| BIM37765 | Duality of, or non-trade, purpose: loans/advances to others: architect buying shares in client companies |
| BIM37770 | Duality of, or non-trade, purpose: loans/advances to others: loans by a firm of solicitors |
| BIM37775 | Duality of, or non-trade, purpose: loans/advances to others: solicitor guaranteeing client's borrowing |
| BIM37780 | Duality of, or non-trade, purpose: loans/advances to others: payment under guarantee given to exhibition |
| BIM37785 | Duality of, or non-trade, purpose: loans/advances to others: by film writer to company to produce a film |
| BIM37790 | Duality of, or non-trade, purpose: loans/advances to others: to allow subsidiaries to meet their obligations |
| BIM37795 | Duality of, or non-trade, purpose: loans/advances to others: to secure sale of subsidiary? |
| BIM37797 | Duality of, or non-trade, purpose: loans/advances to others: or own trade or for subsidiary's? |
| BIM37800 | Expense of earning or application of profits? |
| BIM37810 | Expense of earning or application of profits?: defalcations by controlling director |
| BIM37820 | Expense of earning or application of profits?: rent subject to abatement of profits |
| BIM37830 | Expense of earning or application of profits?: technical assistance in return for a share of profits |
| BIM37840 | Expense of earning or application of profits?: legal costs in connection with an appeal |
| BIM37850 | Expense of earning or application of profits?: accountancy fees in connection with an appeal |
| BIM37860 | Expense of earning or application of profits?: ‘compensation for loss of office’ on share sale |
| BIM37900 | Expenditure having an intrinsic duality of purpose |
| BIM37910 | Expenditure having an intrinsic duality of purpose: clothing |
| BIM37920 | Expenditure having an intrinsic duality of purpose: food and drink |
| BIM37925 | Expenditure having an intrinsic duality of purpose: food and drink consumed at solicitors' annual conference and other matters |
| BIM37928 | Expenditure having an intrinsic duality of purpose: living accommodation |
| BIM37930 | Expenditure having an intrinsic duality of purpose: domestic accommodation |
| BIM37935 | Expenditure having an intrinsic duality of purpose: travel between home and work |
| BIM37940 | Expenditure having an intrinsic duality of purpose: health |
| BIM37945 | Expenditure having an intrinsic duality of purpose: surgery |
| BIM37950 | Expenditure having an intrinsic duality of purpose: cost of restoring health and fitness |
| BIM37955 | Expenditure having an intrinsic duality of purpose: avoiding a conviction |
| BIM37960 | Expenditure having an intrinsic duality of purpose: fines, penalties and damages |
| BIM37965 | Expenditure having an intrinsic duality of purpose: costs of defending against a charge of gross misconduct |
| BIM37970 | Expenditure having an intrinsic duality of purpose: natural love and affection |
| BIM38100 | Partnerships |
| BIM38110 | Partnerships: paying a partner a commercial rate for goods or services |
| BIM38120 | Partnerships: meeting a partner's personal expenditure |
| BIM38200 | Companies |
| BIM38210 | Companies: establishing a company's purpose |
| BIM38220 | Companies: cancellation of trade agreement |
| BIM38230 | Companies: group service company |
| BIM38240 | Companies: flotation costs |
| BIM38250 | Companies: helping a subsidiary |
| BIM38260 | Companies: take-over bids: introduction |
| BIM38265 | Companies: take-over bids: general approach |
| BIM38270 | Companies: take-over bids: nature of company incurring expenditure |
| BIM38275 | Companies: take-over bids: trading companies |
| BIM38280 | Companies: take-over bids: evidence |
| BIM38285 | Companies: take-over bids: group situations |
| BIM38290 | Companies: take-over bids: expenses recharged to trading subsidiaries |
| BIM38295 | Companies: take-over bids: other grounds for disallowance |
| BIM38297 | Companies: take-over bids: investment companies |
| BIM38300 | Commencement, cessation or sale of business |
| BIM38310 | Commencement, cessation or sale of business: costs of going out of business |
| BIM38315 | Commencement, cessation or sale of business: severance payments |
| BIM38320 | Commencement, cessation or sale of business: payment to effect orderly shut-down of trade |
| BIM38330 | Commencement, cessation or sale of business: cost of meeting former owner's obligations |
| BIM38340 | Commencement, cessation or sale of business: compensation for loss of office at time of share sale |
| BIM38350 | Commencement, cessation or sale of business: compensation for cancellation of service agreements linked to share sale |
| BIM38360 | Commencement, cessation or sale of business: compensation for loss of office at time of takeover |
| BIM38370 | Commencement, cessation or sale of business: cost of hiring and firing employees |
| BIM38380 | Commencement, cessation or sale of business: compensation to directors following dispute |
| BIM38385 | Commencement, cessation or sale of business: redundancy payments on takeover |
| BIM38390 | Commencement, cessation or sale of business: payment in lieu of notice |
| BIM38395 | Commencement, cessation or sale of business: liability for future leaving payments to employees |
| BIM38400 | Artificial prices |
| BIM38500 | Fines, penalties and damages |
| BIM38510 | Fines, penalties and damages: compensation for injury to customer |
| BIM38515 | Fines, penalties and damages: penalty for breach of wartime regulations |
| BIM38520 | Fines, penalties and damages: penalties for infractions of the law are not allowable |
| BIM38525 | Fines, penalties and damages: costs incurred in compromising an action for breach of the law |
| BIM38530 | Fines, penalties and damages: cost of libel action |
| BIM38535 | Fines, penalties and damages: payment to get director to withdraw legal action |
| BIM38540 | Fines, penalties and damages: cost of settling civil action, trade purpose? |
| BIM38545 | Fines, penalties and damages: cost of defending charge of breach of contract |
| BIM38550 | Fines, penalties and damages: compromise settlement of action by former director |
| BIM38555 | Fines, penalties and damages: provision for compensation where liability not formally admitted |
| BIM38560 | Fines, penalties and damages: application of hindsight |
| BIM38600 | Tax cases referred to in the guidance |
