BIM42101 - Deductions: scope of: starting point

What can be deducted?

You cannot deduct expenditure in computing the profits of a business for income tax purposes if, either:

1. it falls within the scope of any of the prohibitions specified in The Taxes Acts (for example entertaining, ICTA88/S577), or
2. it is not a proper debit item to be charged under ordinary commercial principles against the incomings of the business in computing the balance of the profits.

See Usher's Wiltshire Brewery Ltd v Bruce, 6TC399 (see BIM37200); Atherton v British Insulated & Helsby Cables Ltd, 10TC155 (see BIM35010); Morley v Lawford & Co, 14TC229 (see BIM37780)).