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Diamond geezer

10 July 2012 / Kevin Slevin
Issue: 4361 / Categories: Comment & Analysis , Business , Income Tax
Illegal activities may result in a taxable profit, but are associated expenses allowable? KEVIN SLEVIN investigates


  • Are arguments over morality helping the tax debate?
  • The profits from illegal activities may still be taxable.
  • Will tax relief for fines or professional fees be obtained?
  • The treatment of staff costs relating to illegal activities.
  • Payments to employees should still be allowable.

It seems generally accepted that liability to tax depends primarily on statutory construction and that moral issues and moralising has no part to play.

Thus a profit made by carrying on a criminal activity is liable to UK tax insofar as the illegal activity in question can be shown to fall within one of the taxing provisions and the courts have resisted any attempts to restrict the application of these provisions to the profits derived from lawful activity.

Therefore tax is charged on the...

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