§ Lord Marlesfordasked Her Majesty's Government:
In what circumstances protection money paid by businesses or sole traders to paramilitary organisations or their representatives in Northern Ireland is allowable as business expenses for corporation or income tax and what estimates they can make of sums so claimed and allowed, respectively, in the most recent tax year for which such information is available.
§ Lord HenleySection 577A of the Finance Act 1988 disallows when calculating business profits for tax purposes any payment the making of which constitutes a criminal offence by the payer. This includes payments to terrorist organisations prescribed under the Prevention of Terrorism Act.
As for other payments made as a result of extortion or blackmail, Clause 139 of this year's Finance Bill denies relief when computing business profits for tax purposes for payments made on or after 30 November 1993.
No information is avaialble about the level of tax relief for such payments made in the past, but there is little evidence that tax relief was given widely.