Revenue Tax Briefing

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Revenue Tax Briefing Issue 25, February 1997

Accountancy Fees

Allowable deductions under Case V are listed in Section 81(5) Income Tax Act 1967. Section 81(5)(d) authorises a deduction in respect of “the cost of ...... management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received”.

Accountancy fees are arguably not part of the costs of management of the premises but relate more to management of the landlord’s financial affairs than to the management of the premises. Such expenses could also be argued not to constitute an expense of the transaction under which the rents were received. However, it is recognised that the efficient running of a business of letting premises requires that a financial account be prepared.

Accordingly, Revenue is prepared to treat accountancy fees incurred for the purposes of preparing a rent account as an allowable deduction in computing Case V income for Income Tax or Corporation Tax purposes.

This treatment will apply to returns submitted after the publication of this issue of Tax Briefing. Returns already submitted will not be re-opened.