Accounting debits under IFRS2 relating to the grant of share options to employees were deductible as a trading expense of the employing companies, were not capital in nature, and neither CTA 2009, s 1038 nor s 1290 prevented deductions from being available.  

The appellants were members of a corporate group of companies. The group operated a number of share schemes for the benefit of employees. The general features of the share schemes involved the group parent (SWHL) establishing an employee benefit trust (EBT). The EBT fund was held on trust for a class of beneficiaries, including employees or former employees of any group member. The EBT trustee had the power to grant options or awards over shares in SWHL pursuant to any share scheme established by a group member.

In its accounting periods ended 30 April 2010, 2011, and 2012, the appellants claimed deductions against trading profits corresponding to accounting debits that