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 CTA 2009, s 1290 did not prevent deductions from being available.  

A group of companies operated share schemes for employees, which involved the group parent (SWHL) establishing an employee benefit trust (EBT). The EBT fund was held on trust for a class of beneficiaries, including present or former employees of any group member. The EBT trustee could grant options or awards over shares in SWHL pursuant to any share scheme established by a group member. 

In their 2010, 2011 and 2012 accounting periods, two companies (NCLI and SWCS) claimed deductions from trading profits for accounting debits in their income statements relating to the grant of share options to their employees. HM Revenue and Customs (HMRC) considered that those amounts were not deductible. NCLI and SWCS