½Û×ÓÊÓƵ

Legal and professional fees

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Legal and professional fees

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

Statutory references to ITTOIA 2005 relate to unincorporated businesses and CTA 2009 relate to companies unless otherwise stated.

Legal and other professional fees can represent substantial costs to a business. A detailed analysis is often required for the purpose of preparing tax computations as this category of expenditure represents a significant risk for disallowed items.

As a general rule, legal and professional fees are usually disallowed due to relating to:

  1. •

    items of a capital nature (this is the most likely category), or

  2. •

    not being wholly and exclusively incurred for the purpose of the trade

The difficulty comes in applying these general rules to particular items of expenditure. Even where an item of expenditure is found to be revenue rather than capital in nature, it still needs to be shown that it also meets the wholly and exclusively test. The general concepts are discussed in the Wholly and exclusively and Capital vs revenue expenditure guidance notes. The legislation does not provide further detail on which fees are disallowable, and for this reason a substantial

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+â„¢
Powered by

Popular Articles

Foreign exchange issues

Foreign exchange issuesOverview of foreign exchange provisionsForeign exchange (FX) movements are generally taxed following the rules applicable to the underlying income, expenditure, asset or liability on which they arise, broadly as follows:Capital assetsOn a realisation basis (ie on disposal)

14 Jul 2020 11:44 | Produced by Tolley Read more Read more

Exemption ― overview ― items exempt from VAT in the UK

Exemption ― overview ― items exempt from VAT in the UKVAT exemption: list of supplies exempt from UK VATThe goods or services that are exempt from VAT are listed under various group headings within VATA 1994, Sch 9, Pt II.It is important to remember that not all supplies that come within a heading

14 Jul 2020 12:45 | Produced by Tolley Read more Read more

Corrections and amendments to the IHT account

Corrections and amendments to the IHT accountThis guidance note explains how to deal with changes to the taxable values in the original inheritance tax account.Why do amendments arise?When the IHT account is first submitted to HMRC, it is based on information available at an early stage of the

14 Jul 2020 11:20 | Produced by Tolley Read more Read more