Section 131 — Corporation Tax Act 2009: Incidental costs of issuing qualifying shares

Incidental costs of issuing qualifying shares 131 1 In calculating the profits of a trade carried on by a building society, a deduction is allowed for incidental costs of obtaining finance by means of issuing shares in the society if—

a the shares are qualifying shares for the purposes of section 117(4) of TCGA 1992, and b the condition in subsection (2) is met.

2 The condition is that the amount of any—

a dividend or other distribution, or b interest, payable in respect of the shares is deductible in calculating, for corporation tax purposes, the profits of the society's trade.

3 But a deduction is not allowed by virtue of subsection (1) so far as the costs fall to be brought into account as debits for the purposes of Part 5 (loan relationships). 4 “ Incidental costs of obtaining finance ” means expenses—

a which are incurred on fees, commissions, advertising, printing and other incidental matters, and b which are incurred wholly and exclusively for the purpose of obtaining the finance, providing security for it or repaying it.

5 Expenses incurred wholly and exclusively for the purpose of—

a obtaining finance, or b providing security for it, are incidental costs of obtaining the finance even if it is not in fact obtained.

6 But the following are not incidental costs of obtaining finance—

a sums paid because of losses resulting from movements in the rate of exchange between different currencies, b sums paid for the purpose of protecting against such losses, c the cost of repaying qualifying shares so far as attributable to their being repayable at a premium or having been issued at a discount, and d stamp duty.