tax investigation Fees

[W14 Girl]

After having gone through a long and expensive " enquiry" which resulted in nothing found and case closed. I have inccured a high cost from my accountant for fronting this enquiry.

I have been informed that this fee is not tax deductable? I am confused as to why I can not claim this as an expense seeing as I did not complete my return inccorectly, Surely there must be a way for this to be offset as a professional fee?

I can not ask my accountant who dealt with this as she is away on maternity leave now, her clerk has informed me of this ( I am assuming he asked another partner in the firm) I am in the process of submitting this return and really need to know if I can or can not submit this cost

Can anyone advise me on this please?

[Generix]

After having gone through a long and expensive " enquiry" which resulted in nothing found and case closed. I have inccured a high cost from my accountant for fronting this enquiry.

I have been informed that this fee is not tax deductable? I am confused as to why I can not claim this as an expense seeing as I did not complete my return inccorectly, Surely there must be a way for this to be offset as a professional fee?

I can not ask my accountant who dealt with this as she is away on maternity leave now, her clerk has informed me of this ( I am assuming he asked another partner in the firm) I am in the process of submitting this return and really need to know if I can or can not submit this cost

Can anyone advise me on this please?

Seems illogical to me, unless you are e.g. talking about an enquiry into your personal tax affairs and are trying to claim a deduction via your company?

[mullet]

The professional fees are allowable in these circumstances. http://www.hmrc.gov.uk/manuals/emmanual/em3981.htm

Additional accountancy expenses arising out of an enquiry into the accounts information in a particular year's return will not be allowed where the enquiry reveals discrepancies and additional liabilities for the year of enquiry, or any earlier year, which arise as a result of

negligent or fraudulent conduct or
for periods beginning on or after 1 April 2008 where the filing date for the return is on or after 1 April 2009, careless or deliberate behaviour.

Where, however, the enquiry results in no addition to profits, or an adjustment to the profits for the year of enquiry only and that adjustment does not arise as a result of

negligent or fraudulent conduct or
for periods beginning on or after 1 April 2008 where the filing date for the return is on or after 1 April 2009, careless or deliberate behaviour.

[W14 Girl]

Many Thanks Mullet,
Your reply has answered all my questions and the EM3981 form confirmed it 100%.

I had no discrepencies found nor addional profits so I will be listing the fee's as an expense. I did try to look on the HMRC site, but I did not find anything, only something that related to investigation insurance.