BIM42120 | Deductions - scope of: tax avoidance

Where, as part of a scheme for tax avoidance, a sum in excess of the commercial price is paid, there is a presumption that the excess was not expended for the purposes of the trade and that excess is not therefore allowable as a deduction. See the judgment of Lord Reid on page 82F and that of Lord Wilberforce on page 93 of Ransom v Higgs and Kilmorie (Aldridge) Ltd v Dickinson [1974] 50TC1 (see BIM38400).