Discretionary trust legal fees

The estate and trust tax return guide help sheet 392 clearly states that legal fees are capital except for costs that relate exclusively to the interest in possession beneficiary. It therefore seems that legal fees cannot be claimed as a deductible trust management expense in the case of a discretionary settlement. But this contrasts with technical journals where writers often suggest that typically 10% of the legal fees are accepted.

I should be very grateful for Taxation readers' views as to which guidance is the correct one to follow. Any other information on this topic would also be very useful.

Query 17 255 — Discretioner.

Reply by Willplantax:

Discretioner has asked about the deduction of trust management expenses against income from a discretionary trust. HMRC have various FAQs on their website on this topic. For example on the trusts pages the 'FAQs — Management expenses'...