36 Queen Street, London, EC4R 1BN | +44 (0)20 7242 2642
McKnight v. Sheppard [1997] STC 846 (C.A.)

Mr Sheppard is a stockbroker. In the late 1980’s he incurred legal costs of ¬¨¬£200,000 odd and had to pay a Stock Exchange fine of ¬¨¬£50,000. The costs were in respect of representation by Counsel and solicitors before a Stock Exchange disciplinary tribunal and an appeal. Mr Sheppard had been accused of various breaches of the Stock Exchange rules most of which were not proved (and a later tribunal ‚Äö√Ñ√∫substantially‚Äö√Ñ√π vindicated him).The Special Commissioner found as a fact that Mr Sheppard had incurred the legal expenditure to save his stockbroking business from destruction. Accordingly, they were deductible under (what is now) s.74(1)(a) ICTA 1988. The fines were not deductible under s.74(1)(e) ICTA 1988 because of IRC v. Alexander von Glehn 12 TC 232.The Court of Appeal upheld the Special Commissioner’s conclusion on the legal fees (the fines were not in issue before the Court of Appeal). Section 74(1)(a) posed a single test. There was no further test of sufficient connection with the trade as Lightman J has suggested in this case. Since the Special Commissioner had made the above findings of fact, the only issue on appeal was whether that was a proper finding on Edwards v. Bairstow 36 TC 307 principles.David Goldberg KC and Hugh McKay appeared for the taxpayer

Latest news:

Gray’s Inn Tax Chambers is delighted to announce that Nicholas Macklam has joined Chambers.
18 Jun 2024
Tolleys Taxation Awards 2024
We are pleased to announce that we have won the Tolleys Taxation Awards 2024 for Tax Chambers of the Year.
28 May 2024
GITC Review
The 2022 GITC Review is now available
If you would like to be added to the mailing list for future issues of the GITC Review, please send an email to Jane.Fullbrook@taxbar.com.
Read review