Fees incurred for preparing accounts for commercial reasons and
for many other accountancy services satisfy ICTA88/S74 (1)(a). 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 SP16/91 reproduced at EM9010. This
has been approved by the courts as a reasonable response to the
practical difficulties of apportionment, see Lord Porter on page
288 and Lord Simonds on page 292 of Smith's Potato Estates Ltd v
Bolland [1948] 30TC267 (see
BIM37850).
For the treatment of fees incurred in connection with the
negotiations of an investigation settlement, see EM9010.
The practice referred to above does not extend to other personal expenses. For instance the costs of completion of a tax return or the computation of CGT liability are not allowable in computing trading profits. But the additional personal costs are likely to be minimal where, apart from the computation of the tax liability on trading profits; an individual's personal tax affairs are straightforward.
