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Accounting fees

Accounting fees

HMRC guidelines specifically state that any individual with income over £100,000 is required to complete a Tax Return.  Given the complexity of the regulations which tend to apply to people in the higher income group, is it still justifiable to maintain that having the Tax Return professionally prepared is not a cost necessarily incurred in carrying out employment duties?  By disallowing accounting fees, HMRC are implying that their helpdesk support is a satisfactory alternative (when the greeting can last over three minutes before a caller is even entered into a telephone queue.)

In essence, should accounting fees for preparing a tax return not be considered in the same way as other expenses which are commonly deducted from taxable employment earnings.

Ray Coman, FCCA, CTA


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09th Dec 2012 17:59


The requirement for general deductibility of an expense is that it is incurred "wholly, exclusively and necessarily in the performance of the duties of the employment".

So your £100K earner (for whom my heart bleeds for having to pay someone else to do their Tax Return for them and not get 50% of it state funded), needs to be performing the duties of their employment when they become obliged to complete a Tax Return and pay you for it.

You've also conveniently disregarded the wholly and exclusively parts of the test.

The fact that HMRC seem to no longer be fit for purpose is a separate issue that has no bearing on the question posed.

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09th Dec 2012 13:46

Tax return notes

Ditto George's comments, the costs have nothing to do with employment but, if there was any self employment or rental income then the fees would generally be allowable.  

I don't agree that the size of the numbers, in themselves, make a tax return more complex and in 9 times out of 10 a taxpayer can follow the well written notes provided on HMRC's website and would not need the helpdesk at all.

Alternatively, s/he could give it a go themselves, then pay you £50 to check it over.

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By taxguru
09th Dec 2012 20:17

Whilst I agree with the previous comments, the point is indeed a valid one. The same fee would have been deductible had it been incurred for filing a return of income from any other source.

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09th Dec 2012 22:59

No it wouldn't

Strictly speaking, Tax Return preparation isn't allowable.  It's an obligation of the taxpayer. rather than the business the taxpayer runs.

In practice where the taxpayer runs a business, and has to prepare accounts, HMRC accept the costs as allowable, but that doesn't make it an allowable cost on base principles. See BIM46450.

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