NAP Holdings UK v Whittles (Inspector of Taxes)

The House of Lords considered whether amounts advanced by one company to other companies participating in a joint venture were deductible as expenditure "wholly and exclusively" for the purposes of trade under the Income and Corporation Taxes Act 1970, section 130. The court examined the distinction between capital and revenue expenditure and the availability of group relief in the context of multiple companies involved in a joint venture where only one company advanced funds.

Key legal issues identified were: (a) whether the payments were revenue in nature or capital; (b) whether the payments were incurred "wholly and exclusively" for the purposes of trade; and (c) the application of group relief principles where several companies participated in the venture but only one made the advances. The supplied text does not set out the court's operative decision or reasoning.

Background and parties: Not stated in the judgment in full. The appeal concerned NAP Holdings UK and the Inspector of Taxes and addressed corporation tax treatment of inter-company advances in a multi‑company joint venture.

Nature of the claim / relief sought: The proceedings raised whether certain monetary advances made by one company to related companies in a joint venture were deductible for corporation tax purposes as being "wholly and exclusively" incurred in the course of trade under Income and Corporation Taxes Act 1970, section 130, and whether group relief principles affected deductibility.

Issues framed:

• whether the advances were properly characterised as revenue expenditure or as capital expenditure;
• whether, if revenue in nature, the sums were nevertheless deductible as incurred "wholly and exclusively" for the purposes of the trade;
• how group relief or the involvement of multiple companies in a joint venture affected the tax treatment when only one company advanced funds.

Procedural posture: The matter was before the House of Lords on appeal. The earlier appellate history is not stated in the supplied text.

Court's reasoning: The supplied text identifies the legal topics and statutory provision considered but does not include the House of Lords' detailed reasoning or conclusion on the issues.

Wider context: The case addresses the recurring tax law problems of characterising inter‑company transactions in groups and joint ventures and the limits of deductibility under section 130.