Linslade case extends 'wholly and exclusively'
Two brothers in a business partnership won a legal victory against HMRC in dispute over the right to deduct legal costs from the profits of their business partnership.
The taxpayers' victory in Linslade Post Office and General Store v HMRC  UKFTT 457 (TC) means that the definition of business expenses incurred “wholly and exclusively” for trade that can be deducted from profits is wider than previously thought, according to tax consultancy Gabelle.
The tribunal centred on an attempt by Shabir Visanji, who had a business partnership with his brother, to deduct around £36,000 in legal expenses when calculating his business’s profits.
Priya Dutta, a senior tax consultant at Gabelle, which advises accountancy firms on tax, said that the tribunal decision has underscored the need for accountants to give careful consideration to whether legal expenses are tax deductible. “Where legal expenses are incurred with a view to preserve an asset, they are deductible for income tax purposes.”