Debt incurred because of your sales is referred to as trade debt. Legal and other expenses incurred by a person in the course of collecting trade debts from customers are tax-deductible.
Usually, legal fees for recovering non-trade debt will be characterized as capital in nature which are not deductible.
2) Renewal of loans by finance company
For this criteria, if you are a finance company, professional or legal fees spent to renew existing loans contract are tax deductible.
For context, the renewal of loan agreement falls under the capital expenditure category. Hence, if you are a non-finance company, sadly you do not meet the requirements for the tax
deduction.
3) Preparation of accounts
It’s usually requires professionals for preparation of accounts and hiring them will cost a fortune. Fret not, these fees are tax deductible.
4) Defending title to the property
When it comes to defending to rights to your property that is used in the business, this is a resounding yes when it comes to tax deduction. This falls under trade rights and is treat as a deductible.
5) Legal expenses incurred by a landlord
Legal expenses including litigation costs incurred on renewal of a lease are tax deductible.
6) Defending an action connected with a trade or breach of trading contracts
In a similar vein, defending rights but in the context of breach in trading contract is considered tax deductible unless the breach was deliberate and dishonest.
7) Dispute over trading contracts
Legal costs incurred on disputes over trading contracts when incurred, for example, claims for compensation for trading goods lost in transit.
