IHTM42958 - Employee benefit trusts: dispositions by close companies: dispositions allowable in computing profits for Corporation Tax

Guidance on the general application of IHTA84/S12 is at IHTM04191. Broadly a disposition is not a transfer of value if the disposition is allowable for the purposes of calculating the transferor바카라 사이트™s Corporation Tax (CT). The words 바카라 사이트˜is allowable바카라 사이트™ are in the present tense and can only be satisfied where the contribution to the EBT is allowable as a deduction against CT for the tax year in which the contribution is made.

A deduction in the CT accounts can be permanently disallowed by the following:

  • capital expenditure disallowed by ICTA88/S74(1)(f) & CTA09/S53,
  • expenditure not wholly and exclusively incurred under ICTA88/S74(1)(a) and CTA 09/S54.

If expenditure is not allowable for any of these reasons then IHTA84/S12 cannot apply.

However, the timing of a deduction can be deferred to a later period by the following:

  • generally accepted accounting practice (UITF32) which capitalises contributions to an EBT by showing them as an asset on the company바카라 사이트™s balance sheet until and to the extent that the assets transferred to the intermediary vest unconditionally in identified beneficiaries
  • expenditure subject to FA89/S43, the 바카라 사이트˜Dextra바카라 사이트™ decision (IHTM42959), and
  • from 27 November 2002 onwards, expenditure subject to FA03/Sch24 and CTA09/S1290(2) and (3). Under these provisions, where a qualifying benefit is provided from the EBT during or within nine months of the end of the accounting period in which the contribution was made, then a CT deduction is still allowed for the tax year in which the contribution was made and IHTA84/S12 can still apply. But if a qualifying benefit is provided later on it will be allowed as a CT deduction only in that later tax year. A qualifying benefit includes a payment of money or transfer of assets which gives rise to an employment income and NICs charge, and, following the introduction of ITEPA03/Pt7A, the taking of a relevant step on or after 6 April 2011.

So if a contribution to an EBT is not initially allowable as a CT deduction within the same tax year, it will be necessary to see whether or not a qualifying benefit is provided from the EBT within the nine month period so that the CT deduction is given. If a qualifying benefit is provided outside of this window, although there may be a CT deduction for a later year, IHTA84/S12 cannot apply.