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Are these legal fees an allowable expense?

Started by Grassman, June 02, 2024, 02:59:45 PM

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Grassman

I have a rental flat (top floor) in Scotland that is part of a tenement along with a middle flat and a ground floor shop.

Urgent roof repairs were required in 2021 which I organised and paid for with the intention of getting the others to pay 1/3 each. Unfortunately, the title deeds were ambiguous on the split for repairs and the other flat owner paid much less than a third arguing that was all he had to pay according to his title deeds.

This ended up in court and I won the case although incurring solicitors fees.

Would these fees be classed as an allowable expense?

David

I assume you mean the legal fees?

The loser pays the fees.

Grassman

Thanks for replying David. Yes, the court did award me an amount for legal expenses which the loser paid. However, the hourly rate the court uses for assessment of legal fees is capped and is less than the hourly rate I was paying my solicitor. This still left me with a legal bill to pay and I was wondering if this would qualify as an allowable expense against rental income.


Grassman

Thank you jpkeates. I thought that maybe this wouldn't count as an allowable expense because the court action didn't involve a tenant.

jpkeates

I'm presuming Scotland is the same for tax as England, but the costs are allowable because they relate to the business, rather than the tenant.