My client JHL is s firm of solicitors in partnership. They represented TM in a court case - but JHL and TM lost. Nevertheless, TM paid the fees charged by JHL.
It transpired that JHL had given bad advice to TM. TM then took JHL to court to recover the fees he paid. TM won.
Now, my client must repay the fees he charged.
Is this repayment deductible for tax for JHL, my client solicitor?
The fees JHL charged were reported as income to the partners.
My gut instinct says Yes - they are deductible. However, I would appreciate your thoughts and any useful links.
Thanks.