Starting a business may incur a number of legal costs, like drawing up a lease, agents or surveyor fees. There are a number of legal costs associated with owning a business which may include fees incurred during the acquisition of property or assets, or business advice from an accountant. Some legal fees are deductible from profits, while others will be treated as capital allowances.

Most expenses which are incurred are deductible as long as they are ‘wholly and exclusively’ for the business. If an expense is used for both business and private use, like a telephone bill, the bill must be apportioned so that only the business use is claimed for.

The legal costs involved with the buying of property or equipment are included in the asset’s purchase price and therefore, treated as capital allowances. The capital allowance rules will apply with allowances being reclaimed over the lifetime of the asset. The legal costs for any disputes with HMRC are not deductible, and this includes fines or penalties received. If a legal fee directly relates to the operation of a business, and is ordinary and necessary, it may be deducted as a business expense.

The fees which are incurred for the preparation and submission of company accounts are deductible as they are necessary for the business. The legal fees which are incurred when drawing up a new lease are not deductible as they refer to the capital of a business. Legal fees are a complex issue which is why professional advice should be sought.

The Accountancy Partnership

We are a national firm of accountants that specialise in small and medium sized businesses. We have been trading since 2006 and have more than 1,000 clients across many different industries and areas of the UK.

Our staff has a wealth of experience and qualifications from the major accountancy and tax associations such as ACCA, AAT, ICPA, IFA, and FTA.

Our clients receive many benefits including:

• Unlimited help and advice throughout the year — We offer our clients unlimited ongoing support for their business. We often find that new clients have lots of questions about running a business and about how the tax system works. We have heard every possible question many times before and therefore can offer new clients the very best advice.
• Free representation in the event of a HMRC investigation — If one of our clients is selected for a HMRC investigation then we will offer representation at no additional cost. We fight our client’s corner and ensure that our clients do not pay a penny more than necessary on the conclusion of the investigation.
• Dedicated Accountant — Our clients have their own dedicated accountant in which they can contact anytime. We feel this is important because it means our accountants can get to know their clients and build good relationships. All our accountants work from our main office and we never outsource work.
• Recommendations — With every piece of work we carry out for clients we look for recommendations that can be made. These recommendations can be anything from structuring the business in the most tax efficient way to recommending an insurance quote to reduce costs for clients.
• Free business guides — When a new client joins us we send them a free business guide. These guides outline in simple terms how the tax system works along with key dates and deadlines. Most clients find the guides to be extremely useful.
• Financial advice — We have a very reputable financial advisor who helps our clients to structure their finances in a way that best suits their needs. We always look out for circumstances where we think clients can benefit from financial advice and add it to their recommendations.

Please click here for a quotation for your business. Please also feel free to contact us if you have any questions or would like further information; 0800 0430 007, info@theaccountancy.co.uk.

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Disclaimer: The information contained in these articles is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.