Corporation tax—Computation of profits—Deductions

Upper Tribunal (Tax and Chancery Chamber), Birss J, 16 Jul 2013

The “wholly and exclusively” test in s 74(1)(a) of the Income and Corporation Taxes Act 1988 (ICTA 1988) does not set up two categories of purpose—private and business—and provide that everything should be allocated to one or other category. The question is only whether the taxpayer’s actual purpose has been exclusively (namely solely) a business purpose. If not then the test is not satisfied.

Jonathan Peacock QC (instructed by Deloitte LLP) for the taxpayer. Patrick Way QC (instructed by the Revenue and Customs Commissioners) for the Revenue.

The taxpayer was a fishing, fish processing, fish wholesaling and fish retailing company based in Plymouth. Its retail business (within the stores of one of the major supermarkets retailers) traded as “South West Seafoods”. The taxpayer was controlled by C. It was common ground that C’s state of mind amounted to the state of mind