Chapter 4 - 2.7 - Legal and Professional Charges

Question 1

When is expenditure on legal and professional fees allowable? (with examples)

Answer 1

If incurred for the purposes of the trade e.g
- Legal fees chasing debts (aka cost of hiring lawyer)
- Charges incurred in defending the title to fixed assets

Question 2

Legal and professional fees relating to capital expenditure are… (example)

Answer 2

Generally disallowable, e.g fees associated with acquiring new fixed assets

Question 3

Which legal and professional fees relating to capital expenditure are exceptions and are specifically allowable?

Answer 3

• Fees and other costs of obtaining long term debt finance
• The cost of registering patents
• The expense of renewing a short lease (a lease for 50 years or less), although the legal expenses incurred on the initial granting of the lease are not