Elliott: input tax on legal fees in a partnership dispute

Graham Elliott, transaction tax consultant at Withers Worldwide analyses the implications of the recent tax ruling in the case, 'A Partnership' (TC04358), on whether VAT is recoverable on legal fees relating to partnership disputes

It is common, where legal fees are incurred by principals of businesses, for HMRC to say that the fees were not a cost of the business per se and input tax should not be allowed. A recent case in this line is that of 'A Partnership' (TC04358).This was an anonymised case concerning an '1890 Act' partnership which had, at one time, consisted of four partners.

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