Newth Talks Tax: Accountancy fees - tax deductible for sole trader

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Accountancy fees - tax deductible for sole trader

C asked whether they were right in thinking that the accountancy fee for payroll services and producing the annual accounts for a small client were tax deductible, but not the fee for completing and submitting the tax return, in a query dated 23 April 2007. If this is correct, should the fee for preparing the accounts and calculating the tax due be separated from the fee for preparing the tax return?

Steve confirmed that the fee for completing the tax return was deductible in the case of a sole trader. This extra cost would be minimal in the case of a small sole trader.

This subject is addressed in the HMRC Business Income Manual at BIM46450. Strictly speaking the cost of preparing the accounts comes within th...

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21st Mar 2008 17:23

CT allowable?
I can't really see why there should be a dissallowance here if the bill is entered on the P11D as a BIK. If the benefit is taxable on the employee it is surely part of their remuneration package in the same way as is their salary or bonus etc. If the employer agrees to meet an employee's pecuniary liability this is a benefit in kind taxable as such and the reason for the payment is presumably because the employer has decided, (and I would recommend that this be properly minuted as such at the time of the payment) that this is just another part of the employee's pay arrangements and as such the cost to the company ought to be fully CT deductible. Of course there is also the point that on meetign an employee's bill the employer ought to operate PAYE as well!

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18th Mar 2008 13:56

No CT deduction for benefits
If a benefit such as completing the director's personal tax return is included on the P11D then it has never been clear to me why it should be disallowed for CT purposes subject to the normal caveat of the director's overall package not being excessive. Of course there is the Dracup decision in favour of HMRC. That decision makes some sense in an era of no BIK charge but much less so these days.

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