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Where, however, a series of payments is made and the payments are in respect of the use of the asset rather than its outright purchase (whether through a lump sum payment, instalment payment or a series of annual payments), the sum paid is a proper deduction in computing the profits of the trade.

In Scottish North American Trust Ltd¹, Lord Atkinson said in relation to interest paid on certain overdraft facilities:

'The interest is, in truth, money paid for the use or hire of an instrument of their trade as much as is the rent paid for their office or the hire paid for a typewriting machine. It is an outgoing by means of which the company procures the use of the thing by which it makes a profit, and like any similar outgoing should be deducted from the receipts, to ascertain the taxable profits and gains which the company earns.'

Thus rent payable in respect of business premises is deductible even though the lease of those premises giving right to the obligation is