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Corporation tax treatment of deal fees

Category Technical Articles
AuthorTechnical Department
Article by Bradley Keast,George Lovell and Alex Ives of KPMG. This article appeared in the August 2006 issue of Tax Adviser. In the height of deal frenzy, the corporation tax deductibility of deal fees is not often at the forefront of management thinking. However, when the total fees on even a small acquisition are frequently into hundreds of thousands of pounds, care needs to be taken when claiming a deduction for these costs.

This article aims to provide readers with clarity on some of the main issues, princiapally an overview of:

  • historical anc current practice with regard to the corporation tax deductibitily of deal fees incurred on an acquisition as an expense of management, and
  • the tax rules in respect of a corporation tax deduction for the costs of obtaining loan finance.

The authors restrict themselves to commenting on the case of a 'successful acquisition', and no consideration is given to any other forms of transaction such as disposals, floats or abortive acquisitions. In addition, they do not consider the VAT treatment of deal fees.

Technical Department
020 7235 9381

August 2006 by Bradley Keast, George Lovell and Alex Ives

 

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