Payment to director was not deductible

The taxpayer bought a property in March 2009 for £725 000 and sold it for £1.03m in December 2014. The day after the sale £305 000 was paid to A.

The purchase was funded from a combination of a bank loan and funds provided by A the sole shareholder of the taxpayer.

The taxpayer did not include any chargeable gain in its self-assessment tax return for the year ended March 2015.

After an enquiry HMRC concluded the taxpayer had realised a chargeable gain on the disposal of the property which was subject to corporation tax and amended the tax return.

During the enquiry the taxpayer argued that the property had been beneficially owned by A (who was non-UK resident at the time). However at the hearing the taxpayer said it had been the beneficial owner but the payment was deductible on the basis that it had a non-trading...