Income Tax (Trading and Other Income) Act 2005 section 55

Crime-related payments

Section 55 prohibits deductions from trading profits for payments that constitute criminal offences or payments made in response to blackmail or extortion.

• No deduction is allowed for expenses incurred in making a payment if the act of making it is a criminal offence.
• Payments made outside the UK are also non-deductible if an equivalent payment made anywhere in the UK would constitute a criminal offence.
• Payments made in response to blackmail (in England, Wales and Northern Ireland) or extortion (in Scotland) cannot be deducted.
• This rule overrides any other provision that would otherwise allow a deduction when calculating trading profits.