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Legal warning over expenses

Business advice firm Grant Thornton has warned consulting engineer firms and other professional services companies to anticipate personal expenses investigations from Her Majesty's Revenue and Customs (HMRC). Grant Thornton is predicting intense enquiries from HMRC into the calculation of work in progress and accrued income, personal expenses, bad debt and dilapidation provisions, partner recruitment costs and a host of other payments. It says HMRC has recently recruited a team of accountants to investigate professional services firms, which it says have often operated under the Revenue's radar. Lenka Hennessey, director within Grant Thornton's Professional Practices Group warned: “Increasingly we are being contacted by professional services clients who have been notified by the Revenue that their business is under investigation relating to the deductibility of expenses against profits. “The level of detail that firms must respond with is far more sophisticated and lengthy than in the past - this is clearly a result of the recent recruitment drive by the Revenue,' she concluded.