Section 133A — Corporation Tax Act 2009: Compensation payments: restriction of deductions

Compensation payments: restriction of deductions 133A 1 In calculating the profits of a trade carried on by a company (“company A”) no deduction is allowed for expenses incurred by the company if and so far as—

a the expenses are in respect of amounts of relevant compensation (see subsection (3)),

and b the disclosure condition is met in relation to the expenses (see section 133C).

2 Subsection (1) does not apply to expenses which are excluded by section 133D.

3 In relation to company A, “ relevant compensation ” means compensation which is paid or payable—

a to or for the benefit of a customer of company A in respect of relevant conduct (see subsection (6)) of company A, or b to or for the benefit of a customer of a qualifying company in respect of relevant conduct of that qualifying company (but see subsection (4)).

4 Compensation paid or payable as mentioned in subsection (3)(b) is not relevant compensation so far as it is paid or payable under arrangements entered into between company A and the qualifying company on arm's length terms. 5 “ Qualifying company ”, in relation to company A, means a company which is associated with company A (see section 133L) at the time when the expenses in question are recognised for accounting purposes.

6 For the purposes of this section conduct of a company is “relevant conduct” if the conduct occurs—

a on or after 29 April 1988, and b at a time when the company is a banking company (see section 133E).

7 For the purposes of subsection (1) it does not matter whether the compensation is paid, or to be paid, by company A or another person.

8 In this section— “compensation”, “payment” and references to compensation “paid or payable” in respect of relevant conduct of a company, are to be read in accordance with section 133K; “ conduct ” includes any act or omission; “ customer ” has the meaning given by section 133J.