BIM37700 - Wholly & exclusively: duality of, or non-trade, purpose: remuneration, etc
Introduction and layout of guidance
Over the years a number of cases have come before the courts to consider the deductibility of amounts paid to employees, including directors. Normal employee costs are allowable but a variety are not, including:
- Employee costs that are capital - see for example BIM37725.
- Dividends paid to employees - see BIM37705.
- ‘Excessive’ remuneration, including remuneration paid to obtain a fiscal advantage - see BIM37707, BIM37715 and BIM37740.
In addition there is a statutory timing rule at FA89/S43 that precludes deduction for amounts paid more than nine months after the end of the period of account in question. There is detailed guidance at BIM47130.
|BIM37705||Claim to deduct dividends paid to directors (Eyres v Finnieston Engineering Co Ltd)|
|BIM37707||Excessive remuneration: establish the purpose (Stott & Ingham v Trehearne)|
|BIM37715||Paid to daughter (Copeman v William Flood & Sons Ltd)|
|BIM37717||Payment to retiring director following dispute (Deverell, Gibson & Hoare Ltd v Rees)|
|BIM37720||Payment to director changing duties because of ill-health (Wilson v Nicholson Sons & Daniels Ltd)|
|BIM37725||Loss on sale of property used as temporary residence by employee (Owen & Gadsdon v Brock)|
|BIM37730||Payment of share of profits following sale of shares (Faulconbridge v Thomas Pinkney & Sons Ltd)|
|BIM37735||Wife or civil partner’s wages (Moschi v Kelly)|
|BIM37737||Whether payments to children were allowable remuneration (Dollar & Dollar v Lyon)|
|BIM37740||Excessive remuneration - disallow the excess (Earlspring Properties Ltd v Guest)|
|BIM37745||Premium to secure directors’ pension (Samuel Dracup & Sons Ltd v Dakin)|