Subvention payment relief turns on the accounting period, not the recipient's trading status on the date of receipt.

A subvention payment under section 20 of the Finance Act 1953 was treated as deductible where the statutory conditions were met for the relevant accounting period, because the provision relates the payment back to that period. The majority held that subsections (9) and (10) serve different functions: subsection (9) defines the qualifying company class by residence and carrying on a trade, while subsection (10) requires the associated-company relationship to subsist from the start of the accounting period until payment. The recipient's cessation of trading before actual receipt did not defeat the deduction, so long as the other statutory requirements were satisfied.

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Issues: Whether a subvention payment made under section 20 of the Finance Act, 1953 could be deducted as a trading expense where the receiving company had ceased trading before the payment was actually made, and whether subsections (9) and (10) required the receiving company to be trading at the date of receipt.

Analysis: Section 20(1) treats a subvention payment as a trading receipt of the company with the deficit and as a deduction to the paying company if the statutory conditions are met. Subsection (9) qualifies the class of companies to which the section applies by requiring residence in the United Kingdom and carrying on of a trade, while subsection (10) governs association by requiring the subsidiary relationship to subsist between the beginning of the relevant accounting period and the making of the payment. The majority held that the time of actual receipt is not decisive for the relief, because the section is directed to the accounting period and the payment is statutorily treated as relating back to that period. Subsections (9) and (10) were treated as independent in function, and the cessation of trading by the recipient before the payment did not defeat the claim where the other conditions were satisfied.

Conclusion: The payments remained allowable deductions as trading expenses notwithstanding that the recipient company had ceased trading before receipt, and the appeal succeeded.

Ratio Decidendi: Under section 20 of the Finance Act, 1953, entitlement to relief depends on the statutory conditions being satisfied in relation to the relevant accounting period and the continuing associated-company relationship at the time of payment, not on the recipient company continuing to trade on the date the payment is received.

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