When accountancy fees incurred in connection with an investigation are allowable is explained at BIM46450 and EM3981. Additional accountancy expenses incurred because of such an enquiry are not allowable if: the enquiry reveals inaccuracies and additional liabilities for the year of enquiry (or any earlier year), and those inaccuracies are careless or deliberate (no penalty should arise where the inaccuracy has arisen despite reasonable care being taken). Where the fee protection policy entitles

Fees paid for work done in calculating the taxable underwriting profit or loss are allowable. For example, £500 paid in January 2006 for work done in 2005 in relation to the 2002 account results is a deduction in arriving at the 2006-07 Lloyd’s profit or loss. In common with other trades, fees for work such as inheritance tax planning, in relation to other business interests, or submission of loss claims, cannot be claimed as a trade deduction. Where the underwriter is an accountant and has deal

The Inspector declined to accept that the fines and fees were deductible. The Special Commissioners found that expulsion of Mr Sheppard from membership of the Stock Exchange, or suspension for six months, would have been the end of his firm. In fighting the proceedings and appeal and incurring the legal fees, Mr Sheppard had not been concerned to protect his personal reputation but his sole object was to avoid the destruction of his business. The Special Commissioners held that the legal fees we

Fees incurred for preparing accounts for commercial reasons and for many other accountancy services satisfy the ‘wholly and exclusively’ test. In strictness, any additional fees incurred for computing and agreeing the tax liability on trading profits are not allowable. There is, however, a longstanding practice of allowing normal recurring legal, accountancy etc expenses incurred in preparing accounts, or agreeing the tax liability, see Statement of Practice SP 16/91 reproduced at EM3981. This h

Professional fees incurred on the renewal of a short lease with the owner’s consent are capital but are likely to be small; in which event you may allow them on de minimis grounds. Circumstances where the amounts may be larger and where you should contend, in appropriate cases, that the expenditure is of a capital nature include those where: the new lease is for a long term (say, a period which exceeds, or may at the lessee’s option exceed, 50 years), or there are provisions in the lease for the

The legal etc expenses incurred in connection with the first application for a licence are not an allowable deduction from trading profits (see Kneeshaw v Albertolli [1940] 23 TC 462). Legal expenses incurred in obtaining renewal of an existing licence are allowable as a deduction. Legal etc expenses connected with the transfer of a premises licence are not deductible from trading profits (see Morse v Stedeford [1934] 18 TC 457).

For detailed guidance on the deduction of professional fees see BIM46400 onwards.

Fees and expenses incurred in obtaining the grant or the extension of the term of a patent for the purposes of a trade are admissible as a deduction in computing the profits of the trade. Fees and expenses incurred in connection with unsuccessful applications for patents for the purposes of a trade are also allowable. Fees incurred for the renewal of a patent for the purposes of a trade are allowable. Agents’ charges in connection with the renewal of a patent are allowable if the renewal fees ar

The chapter that follows discusses the general approach to the deduction of professional fees and covers a number of specific matters on which fees are expended in greater detail. You should bear in mind that professional fees connected with the acquisition, disposal or modification of a capital asset will also be capital expenditure and so disallowable (see BIM35000 onwards). This chapter contains the following:

S33 Income Tax (Trading and Other Income) Act 2005, S53 Corporation Tax Act 2009 The costs of setting up an EBT are capital expenditure and not an allowable deduction in computing taxable trade profits. The existence of an EBT is an asset or advantage of an enduring nature for the company that sets it up. EBTs typically have a life of up to 80 or 125 years, see BIM44501. The capital costs of setting up an EBT include: the initial amount (usually a small amount such as £100) settled by the person

TCGA92/S38 defines the incidental costs of acquisition and disposal. The definition is exhaustive. No other expenditure is allowable unless specifically provided for by TCGA92 (see, for example, TCGA92/s143(6) (see CG56084). If a disposal by a company (Company A) is deemed to have been made by another company (Company B) following an election under TCGA92/S171A (CG45355), incidental costs of disposal incurred by Company A which would have been allowable if the gain had been chargeable on Company

Costs incurred by a company to effect changes in its status, for example flotation costs, the initial charges of a Stock Exchange quotation, expenses connected with a purchase of own shares (see BIM46400 onwards and in particular BIM46425 and BIM46460) will not normally be deductible on the grounds that they are: capital (for general guidance see BIM35000 onwards), and/or there is a non-trade purpose in incurring the expense (see BIM42105). But no objection should normally be raised to the deduc