This is a great question and it comes up a lot!
Strictly any costs have to be able to meet the “wholly and exclusively” test just like any other deduction. So, again strictly, this would mean the costs associated with preparing financial accounts for a business would be allowable BUT preparation of your personal tax return would not be.
That said there is a long standing practice of allowing costs so long as the taxpayers affairs are otherwise very straightforward.
As an example a landlord with 20 houses and no other income at all could make an argument that the tax return is only due as a result of the need to calculation and declare the rental profit. The tax return is a personal matter not a property business one but is only needed because of the rental. My own practice in this regard is to allow a deduction for say 75% of the tax return fee. On a £400 fee I’d claim maybe £300 and leave £100 as a “personal” expense that does not attract relief. You could claim 100% but you’d be relying on the goodwill of HMRC not to take up the point if there was an enquiry.
If however the same landlord has three paid employments, multiple sources of investment income and some shares related capital gains to report the argument for claiming a deduction for the tax return against the rental income is significantly weakened as the majority of the works would be incurred for other reasons. In a case like this where my approach would be to apportion the fee at a reasonable rate which would depend on the levels of work involved.
If this was the same taxpayer as above but the costs were now £1,000 as a result of the other activities I’d aim for maybe £300 of deduction against rental using the same logic and the balance would be the “personal” expense. In this example none of the other things to report would allow a claim for an element of fees so £700 would not attract tax relief.
This covers landlords and the self employed. What about company directors? Well a company director would only be reporting say salary and dividends on their return and neither of those would allow a tax relief claim against them for tax return fees. Can the company pay the fee then? Of course it can! Companies can profile benefits in kind to directors and employees if they want as part of their package.
The costs of providing the package is an allowable expense BUT the benefits in kind provided are taxable on the director or employee. So if your company pays you £400 tax return fee on your behalf it will be a taxable benefit in kind – this means you will have to declare the £400 as income and pay tax on it. Much the same as if the company had simply paid you £400 more in wages (not quite the same but similar). The company would also have to declare the payment of the benefit in kind to HMRC just like it would for company cars or private medical.
So although the company will save corporation tax on making the payment you will pay income tax on the value. Probably easier to simply pay it yourself.