You are a trainee Chartered Certified Accountant, and your firm has recently completed its audit of E-Commerce plc’s financial statements for the year ended 31 March 2014. The company runs an internet-based retail business.

E-Commerce plc prepared its own corporation tax computations for the year ended 31 March 2014, and your colleague has completed your firm’s tax audit of these figures. E-Commerce plc’s original corporation tax computation, along with references to your colleague’s queries, is as follows:

E-Commerce plc – Corporation tax computation for the year ended 31 March 2014

Your colleague has raised some queries in regard to E-Commerce plc’s corporation tax computation. Apart from any corrections arising from your colleague’s queries, the corporation tax computation prepared by E-Commerce plc does not contain any errors.

Query 1 – Legal fees
E-Commerce plc has treated all of the company’s legal expenditure as allowable when calculating its operating profit. However, legal expenses include the following:

(i) Legal fees of £80,200 in connection with an issue of £1 preference shares.

(ii) Legal fees of £92,800 in connection with the issue of loan notes. The loan was used to finance the company’s trading activities.

(iii) Legal fees of £14,900 in connection with the renewal of a 99-year lease of property.

(iv) Legal fees of £4,700 in connection with an action brought against a supplier for breach of contract.

(v) Legal fees of £8,800 in connection with the registration of trade marks.

Query 2 – Deduction for lease premium
The amount assessed on the landlord has been correctly calculated, but the life of the lease should be 15 years and not the 12 years used by E-Commerce plc. The lease commenced on 1 April 2013.

Required:
Calculate allowable / disallowable expenditure.