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Professional fees incurred in company sale were capital in nature

By Mark McLaughlin, October 2024

Professional fees incurred in connection with the sale of a subsidiary company were capital in nature and therefore not deductible as management expenses of the vendor company.  

Summary 

Professional fees incurred in connection with the sale of a subsidiary company were capital in nature and therefore not deductible as management expenses of the vendor company. 

Background 

In July 2005, the appellant company (COHL), an intermediate holding company in the Centrica Group, acquired a Dutch company (Oxxio). The Oxxio investment proved loss-making. The decision to sell Oxxio was made at a Centrica PLC board meeting. During the complex process of disposing of Oxxio, COHL incurred fees for professional advisory services (the disputed expenditure). The sale of Oxxio completed in March 2011. COHL claimed relief for the disputed expenditure on its tax return for the accounting

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