Tax treatment of fees associated with abortive sale

[MyNameIsUrl]

A rental property was put on the market for sale, but the sale fell through and now the property is being rented again. Should the solicitor's fee associated with the abortive sale be claimed against income of the ongoing business, or simply be noted and claimed against CGT at the time of the eventual sale some time in the future?

[supremetwo]

Capital:-

https://www.gov.uk/hmrc-internal-manual ... l/bim35325

Contents BIM30000 BIM35000 BIM35300 BIM35325
Capital/revenue divide: general themes: abortive expenditure

Expenditure that would have been capital had it been successful does not change its character merely because in the event it is abortive.
ECC Quarries Ltd v Watkis [1975] 51TC153 was concerned with costs incurred in an unsuccessful planning application.

If the application had succeeded the expenditure would have been capital. In the event the application failed; no asset was acquired or modified (and the company did not rid itself of any disadvantageous asset).

[PinkDalek]

Capital:-

https://www.gov.uk/hmrc-internal-manual ... l/bim35325

Contents BIM30000 BIM35000 BIM35300 BIM35325
Capital/revenue divide: general themes: abortive expenditure

Expenditure that would have been capital had it been successful does not change its character merely because in the event it is abortive.
ECC Quarries Ltd v Watkis [1975] 51TC153 was concerned with costs incurred in an unsuccessful planning application.

If the application had succeeded the expenditure would have been capital. In the event the application failed; no asset was acquired or modified (and the company did not rid itself of any disadvantageous asset).

Capital and not to be claimed against CGT at the time of the eventual sale some time in the future?

[eisman]

"Capital and not to be claimed against CGT at the time of the eventual sale some time in the future?"

If the above was indeed a question, the answer is that abortive fees cannot be deducted in computing any gain (or loss) on future disposal.

There are only certain specified costs that can be deducted in computing gains and losses, including "the incidental costs ... of making the disposal"- see section 38 Taxation of Chargeable Gains Act 1992. Solicitors' fees relating to the actual disposal fall within this heading, but abortive costs do not (as there was no disposal).