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Always Sheet Metal Ltd; Praze Consultants Ltd; J C McCahill Ltd (TC5686)
Payments to employee benefit trusts
The three appeals raised similar issues relating to the deductibility for corporation tax purposes of payments made to employee benefit trusts (EBTs). The main question was whether the payments were made wholly and exclusively for the purposes of the companies’ trades.
The First-tier Tribunal referred to the Upper Tribunal’s decision in Scotts Atlantic Management v CRC [2015] STC 1321 and noted the four principles:
- if any expenditure is incurred partly for a purpose other than the trade it will not be exclusively for the trade;
- to determine the taxpayer’s object in incurring the expense the tribunal must look ‘into the taxpayer’s mind’;
- the object of the payment rather than its effect is crucial; and
- when a payment is part of a wider set of arrangements the relevant...
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