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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): Licensed houses: legal etc expenses

For the powers of the licensing authority and details of licences required to supply alcohol, see BIM61401.

The tax treatment of the expenses associated with licences depends on whether they are incurred by an incorporated or an unincorporated business.


Since 1 April 2002 companies are subject to the rules set out in the intangible assets regime for companies. This is covered more fully in the Corporate Intangibles Research and Development (CIRD) manual.

For guidance on whether or not an intangible asset is an existing asset or a new asset for the purposes of the intangible assets regime, please see the guidance at CIRD10140.

Unincorporated businesses

The legal etc expenses incurred in connection with the first application for a licence are not an allowable deduction from trading profits (see Kneeshaw v Albertolli [1940] 23 TC 462).

Legal expenses incurred in obtaining renewal of an existing licence are allowable as a deduction.

Legal etc expenses connected with the transfer of a premises licence are not deductible from trading profits (see Morse v Stedeford [1934] 18 TC 457).