Share this content
0
588

How do i treat legal fees for busines startup

Treatment of legal fees for purchase of business of going concern

Hi, my client purchased a business from a sole trader that is now trading as a limited company.

How do I treat the legal fees in the accounts and are they tax deductible?

He also inherited the bank overdraft as part of the business - what do i do with this? the bank account they are using is still not in the limited company name. 

Thanks for any advice. 

Susie 

Replies

Please login or register to join the discussion.

By mrme89
23rd Apr 2018 13:37

Yikes.

Thanks (1)
avatar
23rd Apr 2018 14:45

I think the chances of your client having "inherited the bank overdraft" as far as the bank is concerned is zero.

Thanks (1)
23rd Apr 2018 14:51

What should you do with the overdraft ?

Hand it back.

You do realise that, if the account is in the former director's name, he's the only one allowed to draw on it ?

Thanks (0)
23rd Apr 2018 14:57

Ask your legal advisers (the one who charged you these feees), how you came to "inherit" the bank overdraft.

Thanks (2)
to stepurhan
23rd Apr 2018 15:11

stepurhan wrote:

Ask your legal advisers (the one who charged you these feees), how you came to "inherit" the bank overdraft.

Maybe somebody died.

Thanks (0)
avatar
to lionofludesch
23rd Apr 2018 15:49

Thank you. I have requested the information regarding the purchase of the original business and the terms of purchase.

Thanks (0)
to lionofludesch
23rd Apr 2018 16:55

lionofludesch wrote:

stepurhan wrote:

Ask your legal advisers (the one who charged you these feees), how you came to "inherit" the bank overdraft.

Maybe somebody died.

The OP said they had purchased the business. Even if they had bought it off the executors because someone had died, they wouldn't expect to "inherit" the overdraft.
Thanks (0)
to stepurhan
23rd Apr 2018 17:04

stepurhan wrote:

lionofludesch wrote:

stepurhan wrote:

Ask your legal advisers (the one who charged you these feees), how you came to "inherit" the bank overdraft.

Maybe somebody died.

The OP said they had purchased the business. Even if they had bought it off the executors because someone had died, they wouldn't expect to "inherit" the overdraft.

Can't believe you took that comment seriously, stepurhan.

Thanks (3)
to lionofludesch
24th Apr 2018 15:38

Neither can I now.

Thanks (0)
avatar
24th Apr 2018 06:34

In relation to your other question, I see no basis for deducting the fees as an expense of the trade for tax purposes - primarily because they are not an expense of the trade.

Thanks (1)
to Tax Dragon
24th Apr 2018 07:36

Gosh - I almost forgot that one.

Yes - at best, Capital Gains Acquisition cost.

Thanks (0)
Share this content