Corporation Tax Act 2009 section 1304

Crime-related payments

Section 1304 prohibits companies from claiming tax deductions for expenses connected with payments that constitute criminal offences, or payments made in response to blackmail or extortion demands.

• No tax deduction is allowed for expenses incurred in making a payment where the payment itself constitutes a criminal offence in any part of the United Kingdom
• Payments made outside the United Kingdom are also disallowed if an equivalent payment made within the UK would constitute a criminal offence
• Payments made in response to demands that amount to blackmail (in England, Wales or Northern Ireland) or extortion (in Scotland) are similarly disallowed
• The prohibition applies broadly across all sources of income for corporation tax purposes, including trading income, investment business management expenses, and basic life assurance and general annuity business (BLAGAB) management expenses