Legal Fees for Sole Trader CCJ allowable?

Sole Trader legal fees for CCJ set aside and further small claims claim

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My client who is a Sole Trader is in dispute with a customer - offered a full refund on the return of the purchased item (animal) but the customer refused and claimed that the item would not be safe it it was returned to the seller.  Client has had to pay for legal fees (so far £7.5k) for the CCJ set aside and legal work to be able to get this done.  It is now going to Small Claims court but there is also ongoing defamation against my client online which may need to be fought to stop the business being damaged anymore. I am after a definitive answer and hopefully link I can quote, as to whether this can be claimed as an allowable legal and professional expense. Obviously this will help my client decide whether to go after the customer for defamation of character. Even the solicitor is thinking about same due to customers vile emails and correspondence to them.

Thanks in advance

Maggie R

Replies (29)

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Stepurhan
By stepurhan
21st Feb 2024 13:49

Defamation of character (personal) or defamation of business? That's likely to be the relevant key point.

But I doubt you will find a definitive link either way. If you are not already able to tell that this is for the protection of the business, with any personal benefit incidental to that, then you have to judge whether you would be happy arguing it with HMRC. That is going to be highly dependent on more detailed facts than you can share on a forum like this.

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Replying to stepurhan:
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By Paul Crowley
21st Feb 2024 15:08

Agree
It all depends on the facts

Even a tribunal decision could go either way as humans are involved in interpreting the purpose of the payment

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Replying to Paul Crowley:
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By Tax Dragon
21st Feb 2024 15:48

Paul Crowley wrote:

It all depends on the facts

Glad to see you've lost none of your incisive insight. Where've you been? Welcome back.

Facts here appear to be someone sold an animal, offered to buy it back at the same price, had the offer declined and has gone to court.

There must be more to it than that though, so, as you said so... accurately and decisively... it depends.

Only definitive answer available, sorry OP.

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Replying to Tax Dragon:
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By Paul Crowley
23rd Feb 2024 10:15

Life got in the way, so had some time out
Much appreciated.

My guess is that OP's client is comfortable enough to spend money in a personal vendetta.

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Replying to Paul Crowley:
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By Tax Dragon
23rd Feb 2024 10:58

Life's like that.

With me, sometimes I think I get in the way of life. Either way, it's a b***er.

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Replying to Paul Crowley:
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By MaggieRussell
23rd Feb 2024 11:47

The customer is doing all the legal work herself and so she is not having to fork out the huge fees my client is having to to defend her business and her name.

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Replying to Tax Dragon:
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By MaggieRussell
23rd Feb 2024 11:50

My client offered to pay back the purchase price of the puppy on its return as stated in the contract of sale. The customer declined as she is in a personal crusade against puppy farms. My client is a fully licensed breeder with the local authority and is most definitely not a puppy farm.
This woman is not going to go away as she had said she will pursue my client for all future vets fees even if she gets the ccj paid.

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Replying to stepurhan:
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By MaggieRussell
23rd Feb 2024 11:40

It would be the business primarily as she is already naming the business and clients name in consumer rights group.

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By Roland195
22nd Feb 2024 09:14

I believe the argument that the client would let the defamation go personally but is compelled to defend the business has been tried before but I cannot recall the details to trace the case - it's difficult to argue that they would have no personal motivation or benefit from this.

The fact that some of this takes place online and I assume on the business social media pages/accounts may be relevant now.

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Replying to Roland195:
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By Tax Dragon
23rd Feb 2024 09:56

Hard to see how such an expense could be apportioned. Seems to me that there's full relief if wholly and exclusively, no relief if not.

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Replying to Tax Dragon:
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By Roland195
23rd Feb 2024 10:32

My thoughts were that if it were the business being defamed on it's own social media/website etc that does not readily identify or associate the owner then there may be an argument for the legal fees specifically in relation to this.

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Replying to Roland195:
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By Tax Dragon
23rd Feb 2024 11:02

Legal fees specifically in relation to this should (I would have thought) be billed separately, and to the business. That's not an apportionment.

Those fees, separately billed, are subject to W&E.

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Replying to Tax Dragon:
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By MaggieRussell
23rd Feb 2024 11:43

What's w & e please?
I will check what is on the Bills from the solicitors.

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Replying to MaggieRussell:
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By Leywood
23rd Feb 2024 13:53

MaggieRussell wrote:

What's w & e please?

Basics.
Sorry but if you dont know this, you should absolutely not be giving this client any tax advice.

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Replying to Leywood:
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By MaggieRussell
23rd Feb 2024 15:23

Not everyone uses the same shorthand for everything!

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Replying to MaggieRussell:
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By Paul Crowley
23rd Feb 2024 15:01

Wholly and exclusively, as in for the business, not the person.

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Replying to Paul Crowley:
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By MaggieRussell
23rd Feb 2024 15:22

Thanks. Not seen it put in those terms before. Every day a learning one.

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Replying to Paul Crowley:
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By MaggieRussell
23rd Feb 2024 15:22

Thanks. Not seen it put in those terms before. Every day a learning one.

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Replying to Roland195:
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By MaggieRussell
23rd Feb 2024 11:42

My client doesn't have their own website or social media. It's all on a consumer rights group

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Replying to Roland195:
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By MaggieRussell
23rd Feb 2024 11:42

My client doesn't have their own website or social media. It's all on a consumer rights group

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By Tax Dragon
23rd Feb 2024 17:17

I would say it is normally incredibly hard for a sole trader to show that defending scenarios like this doesn't include a personal element. And if there's a personal element, necessarily it's not W&E business, so no deduction for the expenses. But the motive for the attack here sounds like it's business-based. Might that be relevant? Not sure.

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Replying to Tax Dragon:
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By FactChecker
23rd Feb 2024 19:35

Would there be room to reach a conclusion on W&E by inverting the question you (and everyone else) seems to be asking ... such that:
- instead of trying to show there's no element, as part of the reason for the defence, that relates to protecting the individual's reputation;
- try showing that ALL of the 'defamation' statements are clearly targeting the business (name/activities/etc), not specifically the good name of the person in a non-business capacity?

Not saying that would be easy with a sole trader, but if it proves impossible then that would suggest the death knell for further wriggling?

EDIT: I see that MUL has neatly sidestepped this avenue to pose some rather more pertinent questions - to which any comments from OP would be illuminating.

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By More unearned luck
23rd Feb 2024 19:23

What is the customer's ostensible beef, ie what is alleged to be wrong with the puppy? Why didn't the client a) return the customer's money without insisting upon the return of the puppy or b) defend the claim in the county court? The client hasn't helped him/herself, it seems. Perhaps some due diligence into the customer before agreeing to sell might prevent this happening again.

Has the client lost business attributable to this dispute?

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Replying to More unearned luck:
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By MaggieRussell
24th Feb 2024 09:59

I don't think feel it's relevant what is wrong with the puppy as everything was declared at point of sale in the contract. It also states that a refund is only due on return of the puppy as it would be for any refund of an item. My client didn't defend the ccj as she was unaware of the court date until after the fact. Long story.
I just need to know whether the legal fees can be claimed as a business expense.

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Replying to MaggieRussell:
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By MaggieRussell
24th Feb 2024 10:00

Client hasn't yet obviously lost business but who knows. A recent customer did see the post online but after my client explained they were happy to go ahead with the purchase.
Solicitor had asked my client to keep a log of any of these occurences.

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Replying to MaggieRussell:
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By FactChecker
24th Feb 2024 12:10

"Solicitor had asked my client to keep a log of any of these occurrences"
... hopefully not just of occurrences but of any financial loss resulting from each.

That is what I presume MUL was pointing out in "Has the client lost business attributable to this dispute?" ... which ultimately would be the basis for any award if your client is successful in a defamation claim.
The less there is of this, the greater the likelihood that at least some of the action would be seen as defending reputation of the individual (rather than the trade) ... with the result that others keep pointing you towards in terms of your question of 'allowability'.

BTW, although I know you'll regard this as not addressing your question (and IANAL), but your earlier comment worries me:
"This woman is not going to go away as she had said she will pursue my client for all future vets fees even if she gets the ccj paid."
Should your client maybe not be more concerned about obtaining some sort of restraining order than just the perceived defamation?
Presumably the solicitor has advised 'in the round' and not just on the specifics?

Finally, it may by now be too late (positions on both sides entrenched) but has no-one mentioned arbitration as a way out of the mess? The potentially infinite and/or indefinite escalating costs will soon outweigh (and probably already have done) the cost of refunding the purchase price even without return of the puppy.

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Replying to FactChecker:
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By MaggieRussell
24th Feb 2024 13:25

My client is only worried about the loss of business due to this dispute and not her personal situation as she knows she is fully licensed and has nothing to hide.
Arbitration is not possible due to the customers refusing and her vile threats. This would not be happening if my client is not fully licences cross breed dog breeder.
Solicitor is writing to offer a refund of the initial cost of the puppy but not the vets fees the customer states she has had to pay and that she desists from naming and shaming my client's business on any social media or other media going forwards. I just need to know if I can claim all the solicitor and barrister fees my client has had to pay so far.

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Replying to MaggieRussell:
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By FactChecker
24th Feb 2024 13:57

I'm sorry, but you can keep repeating "I just need to know if I can claim all the solicitor and barrister fees my client has had to pay so far" forever ... without ever getting the black-and-white answer that you want.

The main issue (as expressed in various ways by most responders) is set out clearly by Tax Dragon in comment above on 23rd Feb 2024 at 09:56
If the relevance isn't clear to you then you/client need to appoint someone who understands the point; but there is NO guaranteed/concrete answer, because it depends on all the other facts not known to us on a public forum (and that we don't wish to know).

Anyway, the sun is shining so I'm out to do more worthwhile things.

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Replying to FactChecker:
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By I'msorryIhaven'taclue
24th Feb 2024 21:44

Mowing the lawn? Ahh, the joys of spring!

Nothwithstanding the W&E aspect, defamation is an incredibly difficult action to succeed with. Whether slander or libel (spoken word or written word, OP) one of the defences (come to think of it, the only practical defence to all intents and purposes) is that there is an element of truth in the "defamatory" syntax.

Which means that unless your client is Snow White, all this is probably just a case of an over-eager and perhaps avaracious solicitor preying on your client's sensibilities / delicate nature / hormones and dragging you along to ride shotgun. Nothing lost for you, esp if you enjoy learning new things; but don't get too invested in it all. I once had a client go all the way to the High Court in a divorce case, in which the only real winners were both legal teams.

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