ÀÏ˾»úÎçÒ¹¸£Àû

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