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Chapter BIM38545

Document Cited authorities 1 Cited in Related
Vincent
Published date22 November 2013
Record NumberBIM38545
CourtHM Revenue & Customs

S34 Income Tax (Trading and Other Income) Act 2005, S54 Corporation Tax Act 2009

Costs of defending trade assets are allowable - costs of defending personal reputation are not

The cost of defending title to trade or professional assets is generally allowable - see for example Southern v Borax Consolidated [1940] 23 TC 597 (see BIM35540). The costs, for example, of defending personal reputation are not allowable because of duality of purpose (see BIM37965). Whether there is duality of purpose is essentially a question of fact.

In the case of Knight v Parry [1972] 48 TC 580 (see also BIM37960), Mr Parry was employed as an assistant solicitor by the firm of F O Sanders. One of Mr Sanders’ clients suggested that Mr Parry should set up and practice in his own account, in which event that client would instruct Mr Parry to act for them. Mr Parry agreed and set up in practice taking Mr Sanders’ client.

Mr Sanders complained to the Law Society that Mr Parry had solicited Mr Sanders’ client’s business. The Law Society agreed that there was a prima facie case of professional misconduct and invited Mr Sanders to take proceedings in the courts before they would consider the matter further.

In the ensuing action, Mr Sanders failed to prove professional misconduct but was awarded damages against Mr Parry. The grounds for the award being that Mr...

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