S34 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005), S54 Corporation Tax Act 2009 (CTA 2009)

‘Normal’ employee costs are allowable

Where the payment is part of the normal employee costs, the fact that they arise on the occasion of the cessation of business is not an automatic bar to allowance.

The Hong Kong case that follows was heard by the Privy Council. As explained in BIM24235, Privy Council decisions are only of ‘persuasive’ authority in the UK. Given that the Privy Council is composed of UK Law Lords and that they specifically referred to UK tax cases, there is no reason to believe that the decision on a UK case would differ.

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