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Marketing and Legal Fees for purchase of Ltd Co

How to account for legal and purchase fees of Ltd Co Shares.

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Hi all,

We have a client (Mr A) who has purchased a limited company (ABC Ltd - aquired all of the shares of the company) for £100k.  As part of the share purchase agreement, they had to pay both the solicitors fees and also the marketing/sale fee.  These have subsequently been paid out of the ABC Ltd bank account.  My instinct tells me that these are not allowable in the company as the share purchase was that of Mr A and as such, this is a personal expense he would suffer.  Therefore, is this as simple as being a DLA transaction and can not be put in the accounts and added back for corporation tax purposes?  I suppose I do not want to disallow something that could be allowable if I am looking at this incorrectly.

I have tried to find guidance on this just to see if I am correct but I am struggling so any assistance would be grately appreciated. 

Many thanks.

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By Tax is always taxing
16th Sep 2021 16:17

Who was the invoice to, the individuals or the company?

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Replying to Tax is always taxing:
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By David Ex
16th Sep 2021 16:20

Tax is always taxing wrote:

Who was the invoice to, the individuals or the company?

Justin says you can novate.

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Replying to David Ex:
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By Paul Crowley
16th Sep 2021 22:08

Brilliant

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Replying to Paul Crowley:
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By David Ex
16th Sep 2021 22:12

Paul Crowley wrote:

Brilliant

I’m going to use it!

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Replying to Tax is always taxing:
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By Calculatorboy
16th Sep 2021 17:29

Why should it be invoiced to company ?
It's an incidental cost of acquisition of the shares by the individual

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Replying to Tax is always taxing:
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By Jay C
17th Sep 2021 09:15

The invoice is in the name of the individual for the legal fees. I am awaiting an invoice for the marketing/sale fee.

Thank you for taking the time to respond.

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By Paul Crowley
16th Sep 2021 22:10

The person buying agreed to pay per agreement
Is he now suggesting that he did not agree?

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Replying to Paul Crowley:
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By Jay C
17th Sep 2021 09:18

No - there is no disagreement - they agreed to pay and the fee has been paid but I think they feel it is a "business" expense rather than an individual.

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