HMRC’s manual (IHTM28041) states that no deduction can be allowed for accountancy fees incurred after death, except where work was undertaken post-death, in connection with tax repayments that are included as an asset of the estate (with fees capped at 10% of repayment). However, what is the case where fees are incurred post-death resulting in tax owed to date of death. The income tax liability to death would be a liability, can the accountancy fees be deducted too?
The fees are likely to be a deductible liability in their own right unless under the contract they do not fall due and payable until a date after death. By analogy with a repayment I would expect a fair apportionment to be acceptable as long as the result is clearly attributable to pre-death, even if the contract is unfavourably drafted.
Jack Harper