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- November 24, 2014 at 8:26 pm #212869
The figure of £10,960 for other expenses includes legal fees of £2,590 in connection with the purchase of the restaurant property. The remaining expenses are all allowable.
Sir please I don’t understand why legal fees of £2,590 in connection with the purchase of the restaurant is not allowable.
November 24, 2014 at 9:26 pm #212907We only allow revenue expenditure against income – the purchase of a property is clearly capital expenditure so the legal expense would be treated as an allowable cost in calculating any chargeable gain on the subsequent disposal of the property.
November 24, 2014 at 10:08 pm #212917Sory Sir but im still confused. if I understand what you just said the legal expenses should be allowable as they are revenue expenditure, but in the correction they were not allowable.
that is why I was confusedNovember 28, 2014 at 6:16 pm #214173Let me help You Josy, Legal expense is allowable because it is related to a capital expenditure.
Can you refer to the chargeable gains proforma on disporsal of a chargeble asset.November 29, 2014 at 8:50 am #214242No, Josy the legal expense is not revenue expenditure it is capital as it is to do with a capital transaction, hence it is disallowed in the adjustment of trading profit but will eventually be allowed in the capital gains calculation when the property is sold.
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