Contingent liabilities: the effect of TCGA92 S49: incidental costs
The incidental costs of challenging a claim under a contingent liability are not allowable. TCGA92/S49 only applies to legal liabilities which are the subject of the contingency. These cannot include legal costs incurred at a later date.
If a disposal is made subject to a contingent liability which does not fall within TCGA92/S49 (1) the decision in Randall v Plumb applies, see CG14801+. The disposal consideration must be reduced by the value of the contingent liability. No adjustment is made later whether or not the contingent liability is enforced. See CG14825+ for guidance on indemnities.