Section 133A | Compensation payments: restriction of deductions ^F1

(1)In calculating the profits of a trade carried on by a company (“company A”) no deduction is allowed for expenses incurred by the company if and so far as—^F1

(a)the expenses are in respect of amounts of relevant compensation (see subsection (3)), and^F1

(b)the disclosure condition is met in relation to the expenses (see section 133C).^F1

(2)Subsection (1) does not apply to expenses which are excluded by section 133D.^F1

(3)In relation to company A, “relevant compensation” means compensation which is paid or payable—^F1

(a)to or for the benefit of a customer of company A in respect of relevant conduct (see subsection (6)) of company A, or^F1

(b)to or for the benefit of a customer of a qualifying company in respect of relevant conduct of that qualifying company (but see subsection (4)).^F1

(4)Compensation paid or payable as mentioned in subsection (3)(b) is not relevant compensation so far as it is paid or payable under arrangements entered into between company A and the qualifying company on arm's length terms.^F1

(5)“Qualifying company”, in relation to company A, means a company which is associated with company A (see section 133L) at the time when the expenses in question are recognised for accounting purposes.^F1

(6)For the purposes of this section conduct of a company is “relevant conduct” if the conduct occurs—^F1

(a)on or after 29 April 1988, and^F1

(b)at a time when the company is a banking company (see section 133E).^F1

(7)For the purposes of subsection (1) it does not matter whether the compensation is paid, or to be paid, by company A or another person.^F1

(8)In this section—^F1

“compensation”, “payment” and references to compensation “paid or payable” in respect of relevant conduct of a company, are to be read in accordance with section 133K;

“conduct” includes any act or omission;

“customer” has the meaning given by section 133J.