January 15, , am 2 I have not seen the advice which this question refers to, but I suggest there are two distinct questions here. Do non-resident trustees qualify for a tax credit on UK dividends? So it seems the answer should be yes. And why not! Does a UK resident life tenant obtain the benefit of the tax credit including reclaiming the tax if appropriate?
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The trading profits of companies are taxed under S35 CTA To calculate those profits you need to determine: whether sums arising are taxable income of the trade, profession or vocation - see BIM the time at which receipts or expenses should be recognised - see BIM onwards, and what deductions are allowable in computing the profits - see BIM onwards By no means all of the expenditure incurred by a trader is allowable as a deduction in computing the profits of a trade.
There is no comprehensive list of allowable and disallowable expenditure. In general, revenue expenditure is allowable unless there is a specific statutory prohibition. There are several pieces of legislation that either allow or disallow specific expenses. For companies, such expenditure is dealt with under the loan relationship rules - see CFM There is also legislation that disallows classes of expenditure, for example S34 ITTOIA and S54 CTA deny a deduction for expenses not incurred wholly and exclusively for the purposes of the trade.
Expenditure may be segregated into two broad categories. Revenue expenditure The day to day running costs of a business eg staff wages, purchase of trading stock, rent of business premises, and so on are referred to as revenue expenditure. Revenue expenditure is sometimes described as circulating capital.
In the process of turning over, profit or loss ensues. Capital expenditure Capital expenditure eg the purchase of business premises, plant and machinery used in the business process and so on in practice is the opposite of revenue expenditure.
Unless specifically allowed by statute eg the incidental loan finance for unincorporated businesses mentioned above , capital expenditure is not allowable. The wholly and exclusively chapter covers the subjects listed below.
Distributions in a Winding Up TAAR (s396B ITTOIA 2005) - changes to HMRC guidance
Business Income Manual