Treatment of expenses incurred by trustees
A UK IIP Trust receives rental income and in addition to normal expenses of a rental business has incurred professional fees in respect of the first lease of a property for more than 12 months (not allowable).
How are these expenses treated in the trust tax computations please? Are they deductible as trust management expenses? In particular, what will appear on the R185?
Suppose taxable rental profit is £3,000 and the disallowed expenses are £2,000. Tax payable by the trustees is £600, so will the R185 show £2,400 or £400 net?
In general, can an R185 certificate show a greater amount than the beneficiary can possibly receive?
I'm going round in circles on this one.