Section 23C | Meaning of “qualifying third party payment” ^F1

(1)The following provisions apply for the purposes of this group of sections.

(2)A payment is a “third party payment” if it is made (by T or another person) to—

(a)T acting as trustee, or

(b)any person other than T.

(3)A third party payment is a “qualifying third party payment” if the deduction condition or the trade connection condition is met in relation to the payment.

(4)The “deduction condition” is met in relation to a payment if—

(a)a deduction for the payment is made in calculating the profits of the relevant trade, or

(b)where the relevant trade is or has been carried on in partnership, a deduction for the payment is made in calculating the amount on which T is liable to income tax in respect of the profits of the trade.

(5)The “trade connection condition” is met in relation to a payment if it is reasonable to suppose that in essence—

(a)the payment is by way of consideration for goods or services provided in the course of the relevant trade, or

(b)there is some other connection (direct or indirect) between the payment and the provision of goods or services in the course of the relevant trade.

(6)For the purposes of subsection (5) in particular, all relevant circumstances are to be taken into account in order to get to the essence of the matter.