Meaning of ‘finance costs’

Finance costs are defined at FA00/SCH22/PARA63. All of the costs arising from debt financing should be included and HMRC will expect this provision to be interpreted very broadly. It could include off-balance sheet methods of financing. However, finance costs will not normally include costs incurred through the late payment of debts, such as interest paid to trade suppliers or interest on late payments of corporation tax/PAYE/VAT.

For the purpose of calculating any adjustment that may be required (as described in TTM07420 and TTM07430), ‘finance costs’ means the cost of finance.

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