Professional fees - what can be claimed?

Professional fees - what can be claimed?

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I was taught and told that professional fees incurred in relation to a proposed takeover of a company could not be claimed against CT even if the deal failed (ECC Quarries case)

I have just read however (on a rival site that sounds a bit like this one but has tax in the title!)that
"... Broadly, investment appraisals and investigations are deductible as revenue.
However, costs incurred once the decision to invest has been made do not qualify as revenue expenses..."

Having searched the Inspectors Manuals and my own books, I can see no other reference to this anywhere.

Can anyone throw some light on this?

What is the difference between an investment apprasial and aborted takeover costs?

Robert Newman
Robert Newman

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By Paul Soper
06th Mar 2006 13:00

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This stems from the Camas case a couple of years ago - and is derived from the problem of the treatment of holding companies as investment companies, and then applying restrictions on the allowability of expenses which were suited to Victorian Investment Trusts.

Unfortunately, although the courts came up with the right answer in Camas (costs such as those described as part of the costs of holding or making an investment holding companies investments, ie its subsidiaries) the Revenue then decided to "modernise" the rules, as part of which they introduced into the NEW version of s75 a distinction between capital and revenue expenditure which had not been present before.

So the issue now becomes one of considering the point at which an expense changes its character from revenue to capital - unfortunately if an offer to acquire is made, that would be part of the acquisition cost and so is capital by its nature, but does not revert to a revenue expense if the bid is abortive.

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