In Howden Joinery Group v HMRC (TC03396 – 13 March 2014) the partially successful appeal concerned the deductibility of management expenses incurred by HJ in respect of rental guarantees given over leases of retail spaces entered into by its subsidiary MFI Properties.
In order to obtain prime out of town sites MFI had needed parental guarantees. HJ had subsequently been called upon to make payments under the guarantees following the sale of MFI to another group of companies. It was agreed that HJ carried investment business and that therefore the guaranteed payments would only be deductible if they constituted management expenses (ICTA 1988 s 75).
The FTT accepted that the giving of the guarantees (and the making of rental payments under the guarantees) had a dual purpose: to allow MFI to access prime retail sites; and to give HJ a stronger dividend return. This duality of...
90a1d87b-c1b5-43c3-a720-cd324830adee.tmb-editorspic.jpg?sfvrsn=1b2d0a7e_1)
