Corporation Tax Act 2009 section 607

Pre-contract or abortive expenses

Section 607 deals with how expenses incurred before a derivative contract is entered into, or where the contract is never completed, can still be treated as allowable debits for corporation tax purposes.

• Applies where a company incurs expenses in connection with a derivative contract or related transaction it may enter into but has not yet done so
• Covers expenses related to entering into the contract or giving effect to obligations that might arise under it
• The expenses must be of a type that would have qualified under section 594A(1)(b) had the contract actually been entered into
• Qualifying pre-contract or abortive expenses are treated as allowable debits under section 595(2), just as if the company had proceeded with the contract