Payments were expenses incurred in the hope of a return

The taxpayer owned farmland. B was director of the company. Between 2014 and 2016 it made payments to Solar Energy Parks Ltd (SEP) a company in which B owned 50% of the shares. In June 2016 SEP was struck off the Companies House register and the taxpayer included a deduction under the loan relationship provisions from its taxable profits as the result of making a bad debt provision for a loan made to SEP - the amounts paid to SEP since 2014.

The taxpayer said that in 2013 an agreement was reached between B and S (a director of SEP) under which SEP would apply for planning permission to build solar farms on land owned by the taxpayer. The taxpayer would lend SEP the money to do this. After it received planning permission SEP would lease the land from the taxpayer build the solar farm and...