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23 August 2017 You are not logged in. Login now.

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SFS News

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Is your accountant’s bill tax deductible?

accounting costsAccountants provide advice on a wide range of subjects and help to prepare company accounts and financial statements. HMRC allow your company to claim a tax deduction for some of the fees that your accountant will charge.

Your accountant may have helped you to set up your company, you may have received advice on the best legal structure for your new business, or your accountant has prepared your latest set of accounts. What can your company claim to reduce the annual tax bill?

When considering if your accountants bill is tax deductible by the company you need to decide if the cost was ‘wholly and exclusively’ incurred by the company for trading purposes. HMRC will look at the service that you accountant has provided when deciding if the cost will reduce your corporation tax.

Costs for Starting a Company


Whilst the cost for staring a company are minimal, HMRC does not allow you claim this against the company’s tax bill. Whilst many new business owners do pay for the company formation and then file this as an expense with the company post formation it is not tax deductible. It is likely that your accountant will have identified this as an expense but they will have added the amount back into the corporation tax calculations.

The same applies to advice that you may have received regarding the formation of your company ‘before’ starting a company. The advice or guidance was provided to you and does not relate to companies trading activities.

Put simply – you can claim the cost of forming a new company as an expense but you cannot reduce your corporation tax.

Completing your Company Tax Return


Producing financial reports and preparing the companies tax return are tax deductible. The requirements to file accounts each year are a direct consequence of the companies trading and as such can be accounted for in the corporation tax calculation.

Self Assessment Tax Returns and Personal Tax Advice


Any fees charged by an accountant for preparing your self-assessment tax return or providing advice on personal tax matters will not reduce your corporation tax bill. If the company has paid for these services during the year your accountant should add the amount back into the corporation tax calculations. In addition this type of expense will be deemed as a ‘benefit in kind’. The benefit will need to be included on the individuals P11d and tax will need to be paid personally.

When assessing if an accountants fee is deductible you should also ways consider if the cost was incurred by the ‘company’ through its trading activity. If in doubt you could always seek advice from an accountant!

About the Author Mike Harris:
I have been providing advice and support to companies for over 15 years through my company Small Firms Services Ltd. You can follow me on Google+ and also twitter