Transaction costs are generally deductible for corporation tax purposes where they are financing costs falling within the scope of the loan relationships code. Securing deductibility against profits in other cases is more problematic as the costs must both have a revenue, rather than capital, nature and qualify as expenses of management or expenses incurred wholly and exclusively for the purposes of a trade. Last year's decision of the Upper Tribunal in the BAA case has further limited the scope for VAT recovery by SPV acquisition vehicles.
