Corporation Tax Act 2009 section 927

Contributions not made by public bodies nor eligible for tax relief

Section 927 provides an exception to the general rule that expenditure met by another person is not treated as the company's own expenditure, allowing the company to claim the expenditure in certain circumstances where the contributor is not a public body and receives no tax benefit from the contribution.

• Under the general rule in section 926, where someone else pays for a company's expenditure, the company cannot normally treat that expenditure as its own for tax purposes.
• Section 927 overrides this restriction where the contributor is not a public body, the contributor cannot claim a capital allowance (contribution allowance) in respect of the payment, and the contributor cannot deduct the payment in calculating their own trading profits.
• When determining whether the contributor could claim a contribution allowance, the legislation requires you to assume the contributor is within the charge to tax, even if in reality they are not — this ensures the test is applied consistently.
• In practical terms, if a private individual or non-tax-paying entity funds a company's expenditure and gains no tax relief from doing so, the company itself can still treat the expenditure as its own and claim the appropriate deduction or allowance.