Corporation Tax Act 2009 section 1248

Expenses in connection with arrangements for securing a tax advantage

Section 1248 disallows management expenses that are incurred in connection with arrangements whose main purpose is to secure a tax advantage.

• Management expenses are wholly disallowed if any part of those expenses is incurred directly or indirectly in connection with arrangements designed to secure a tax advantage
• Arrangements for securing a tax advantage means any agreement, understanding, scheme, transaction or series of transactions — whether legally enforceable or not — where a main purpose is to obtain a deduction under section 1219 or any other tax advantage
• The rule applies not only to straightforward management expenses but also to amounts that are treated by any other provision as deductible under section 1219
• This anti-avoidance rule sits within a hierarchy: it applies only where the expenses are not already denied by other disallowable purpose rules, such as the unallowable purpose test for investments or for manufactured payments