UK director's claim for legal fees

UK director's claim for legal fees

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Hi all,

I'm somewhat conflicted about whether the following is allowable for Corporation tax. A UK company director who is a Nigerian engineer and the sole owner and employee, has incurred legal fees in arguing with the Home Office, his right to stay and work in the UK. I think that if he is denied the right to work, his UK company would effectively cease to exist and so the legal fees are protecting the companies existence.Or is this a personal expense?

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By Stilltryin
26th Feb 2020 13:41

Personal - as he would no doubt be seeking to remain in the country if he was not a director/employee of the company

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By WhichTyler
26th Feb 2020 14:24

and the company would exist even if the director lived elsewhere

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By Tax Dragon
26th Feb 2020 15:21

But its trade might not, which is probably more relevant.

Were the company to foot the bill, I would see no problem with a CT deduction. Needless to say (I hope), there'd be a tax charge on the remuneration.

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By brian-scholar
26th Feb 2020 15:32

Thank you all for your input. I think you're correct about wanting to stay in the country whatever.

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By Montrose
28th Feb 2020 17:20

The discussion so far has made clear that the expense is not"wholly and exclusively" for the purpose of the Company's trade - so not allowable as an CT expense.

Who was invoiced for the expenses? Possibly if they had been paid by the company directly this was a PAYE benefit to an employee, subject to Class 1 NIC and under PAYE Class 2 NIC and personal income tax, and then arguably an allowable expense?

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