Allowable Company Director's Expense

[brent710th]

A client of mine wishes to charge his company (small company) with legal fees for defending his drink driving charge. These are quite substantial in the region of £25,000. Whilst his case is that the company would suffer if the drink driving charge was sustained it would still be able to conduct normal business without him being able to drive. Hence the expense is not wholly, exclusively or neccessarily for the business and is a personal expense. A family friend is willing to fund the company as a loan for the legal expense so that the company did not suffer financially. He wants to put the expense through the business, charging the P&L and reclaiming the VAT and leaving the family friend's loan on the balance sheet as a creditor.

The questions are would this be legal and an allowable expense against corporation tax and allowable as a VAT reclaimable amount?

Even if this is allowable under company law / revenue and customs etc should the amount not be shown under a directors loan account as a creditor?

Many thanks in advance of any comments / advice.

 

[Graham_07]

I believe that you have already answered the question regarding CT / VAT allowability here :-

the expense is not wholly, exclusively or neccessarily for the business and is a personal expense.

Others may add their comments but I would not see this as in any way relating to the company's business. All other mechanics or entries therefore become irrelevant.

( You mention the fees as being in £. My answer is based on my understanding of Irish Tax Law given that AAM is an Irish based site)