Are legal fees for preparing a shareholders agreement an allowable expense in the company's accounts. I am concerned as to whether the expense need be treated as a benefit in kind for the shareholders.
ian finer
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No
It is a private agreement between the individuals who own the company. It is not a necessary expense of the company's trade. If the legal fees are paid by the company, they are not deductible for corporation tax purposes.
If the fees have not been recharged to shareholder/director loan accounts, they are a taxable benefit. If the fees invoice was addressed to the individual shareholders, the amount of the fees (including VAT, which the company cannot reclaim) should be put through the payroll subject to PAYE tax and Class 1 NIC. If the invoice was addressed to the company, the benefit should be reported on forms P11D and Class 1A NIC paid.
What about against capital gains?
Is the cost of the shareholders agreement deductible against any future capital gain on the disposal of the shares? I've looked, and I'm struggling to find the answer. Will keep looking.