Proper treatment, for corporation tax purposes, of accounting debits which arose in the accounts of the Respondent Companies as a result of the grant to the Companies’ employees of options to acquire shares in the ultimate holding company, Smith and Williamson Holdings Limited of the Companies’ group in several accounting periods. The grants were made by the trustees of an employee benefit trust of which SWHL was the settlor. Pursuant to IFRS 2, on the grant of a share option to an employee, the employer must debit the fair value of the option in its company accounts. The Respondents debited their accounts when the share options were granted to employees by the EBT. The Respondents claimed a corporation tax deduction in respect of the debits. The Appellant, HMRC, refused the corporation tax deduction and issued ‘closure notices’ disallowing the deductions.
Held: The appeal failed. There is no law requiring an adjustment to the Companies’ financial accounts so as to exclude the Debits from the computation of profits.
Judges:
Lord Reed, President
Lord Briggs
Lord Sales
Lord Hamblen
Lady Rose
Citations:
[2022] UKSC 9
Links:
Bailii, Bailii Press Summary, Bailii Issues and Facts
Jurisdiction:
England and Wales
Corporation Tax
Updated: 24 March 2022; Ref: scu.674610