Legal fees on share restructure and issue of new shares

Legal fees on share restructure

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My client has restructured it's shares, with the change of existing ordinary shares to A shares, and the issue of new shares. This happened before trade commenced, and the purpose was to bring in a large corporate shareholder from who the company would benefit from (advice/ reputation/network etc). 

Legal fees were incurred to complete the transaction, and also prepare a shareholder agreement and create new articles of association. My instinct was to disallow the fees in the corp tax as capital. But could there be a case that the restructure was actually for the benefit of the company trade and not for the benefit of the shareholders, and so are allowable?

Thanks

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By User deleted
22nd Sep 2016 06:30

Capital item; the fee for shareholders' agreement is personal to the shareholder.

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By jon_griffey
22nd Sep 2016 09:32

According to HMRC: -

Fees incurred in connection with raising, repaying or rearranging equity capital, including the purchase of own shares, are capital, see Thompson (Archibald) Black & Co Ltd v CIR [1919] 7 TC 158.

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By Steph01
25th Sep 2016 18:26

Thanks both, capital it is then

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By nksimmons
16th Sep 2019 12:09

Bit of an old thread but hoping someone out there may have an answer....

Companies Act s610 states that fees in relation to share issuance may be offset against the share premium account.

I'm looking for practical guidance / examples. I'd just as soon show the gross amount and process fees (as not clear cut what relates to issuance and what relates to other aspects of the fund raise) through P&L (albeit as capital items disallowed for Corporation Tax).

I don't seem to be able to find much literature / guidance on the subject. I'd prefer to avoid netting things against share premium as different investors will be subject to different fees and the whole thing could end up looking a bit messy.

Thanks for any suggestions in advance!

Nick

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