Management expenses were capital and not deductible

The taxpayer was an investment holding company in the Centrica group. In 2009 Centrica decided to sell Oxxio – a company it had acquired in 2005 – and this was done by 2011. Between the years 2009 and 2011 the taxpayer paid professional fees in connection with the sale on which it claimed tax relief. HMRC denied the claim on the basis that the expenditure was not deductible because it was not an expense of management and even if it was it was capital in nature and therefore not deductible by virtue of CTA 2009 s 1219(3)(a).

The First-tier Tribunal dismissed the taxpayer’s appeal but the Upper Tribunal overturned it. The Court of Appeal then found in favour of HMRC. It ruled the expenditure was expenses of management but allowed HMRC's appeal on the basis that it was capital in nature. It...