Litigation Recent Decisions 20/05/97

Whether stockbroker's legal fees are tax-deductible

David McKnight (HMIT) v Brian Stephen Sheppard: Brian Stephen Sheppard v David McKnight (HMIT) (1996)

CA (Nourse LJ, Potter LJ and Mummery LJ) 7/5/97

Summary: Fines and legal expenses incurred by a member of the Stock Exchange in defending disciplinary proceedings threatening his business held on appeal to be deductible for the purposes of income tax.

Taxpayer's appeal against the decision of Mr Justice Lightman allowing an appeal by Her Majesty's Inspector of Taxes and holding that the appellant's legal expenses incurred in defending disciplinary proceedings against him for alleged breaches of the rules and regulations of the Stock Exchange were not wholly and exclusively expended for the purpose of his trade as a stockbroker and therefore deductible within s.130(1) Income and Corporation Taxes Act 1970.