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Posted Fri, 12 Aug 2022 15:18:01 GMT by Aleksandra
Hi, LTD Company has filed a lawsuit for overdue payments from a customer and paid a court fee. However, it has not received a statement of costs from the court or other documents. Can the company include this expense as costs? Can such an expense be considered an allowable expense?
Posted Thu, 01 Sep 2022 12:38:59 GMT by HMRC Admin 19
Hi,

Legal expenses incurred in the normal day to day conduct of the trade are likely to be allowable. Legal and professional costs that a business incurs are allowable when they are wholly and exclusively for the purposes of the trade.

Legal fees resulting from attempting to recover bad debts are deemed to be incurred for the purpose of the trade and are therefore considered to be allowable expenditure in establishing your business profit for the year.

Thank you.

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