Incorportion costs

Incorportion costs

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Am I correct in thinking that company formation costs are allowable as a company expense?
Ben

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By AnonymousUser
22nd Feb 2006 15:05

small but useful
As the formation fees are usually paid by the promoters and not the company, then they should be introduced by journal as a DLA item even if disallowed in the CT comp.

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By User deleted
21st Feb 2006 12:46

It is capital
see BIM 35525. The expenditure is capital and should be disallowed.

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By Andy Reeves
22nd Feb 2006 13:16

Split them
I tend to treat the formation fee only as capital and the incidentals (such as the agents' cost of printing the M&AA, etc) as expenses. It is usually pretty insignificant though. Any additional fees, such as setting up the statutory books are post-formation, so would be expenses.

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By User deleted
21st Feb 2006 13:41

Trivial
These days the actual formation costs are pretty insignificant - £40 or less. If structured properly most of the accountancy costs involved are allowable.

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By AnonymousUser
22nd Feb 2006 10:25

Revenue or Capital
Technically Ellen is right in that it is really a capital expense. In reality if the expense is small, as David says, it is unlikely to be challenged as it would not be significant. However, more complicated formations where higher costs are involved should certainly be treated as a capital expense.

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