Cup of coffee

Like most readers I suspect I have been intrigued by the ongoing saga of whether companies such as Starbucks Amazon and Google are paying the “right” amount of corporation tax in the UK.

I understand that royalty payments to a company in another country is acceptable planning.

I assume that such payments are actually tax deductible in the company’s UK accounts.

My understanding is that an expense is only allowable if it is incurred “wholly and exclusively in carrying on the trade”. I am wondering whether there is a tax planning opportunity that I am overlooking here?

Thinking about this made me wonder whether this strategy might be something that smaller businesses such as my clients might use.

For example if I have a self-employed client should they pay a royalty to say their spouse or other family members – or even a limited...