What are add backs?

[sitewideuk]

Hi all,

I have categorised the cost of my company incorporation as Legal Fee’s which shows as a credit in my add backs section - firstly what are add backs? Secondly, is this the correct nominal code for the cost of Incorporation?

Regards
Donna

[QFMathew]

Hi Donna,

This quote from my colleague may help with explaining ‘add backs’:

@Glenn

Add backs and deductions are additional adjustments that are made to the net profit to factor in any items that are deductable and allowable for tax purposes. We calculate this by reference to a list of nominal codes that generally fit into the criteria for both add-backs and deductions.

For incorporation expenses, you may find this thread helpful:

Incorporation expenses

Hi All, First time setting up a company and new to accounting. My question is: how can i record the incorporation expense I paid to the formation agency in the books? I will really appreciate if you could help me with this=) Cheers, Al

Please let us know if you need any further help

[SQKaccountancy]

Hi Donna,

“Add backs” are expenses that are not allowed for corporation tax purposes. Most commonly these include certain professional fees including incorporation, depreciation and entertainment.

I would also suggest that legal costs are perfectly acceptable in legal fee although you might want to consider professional fees.

Kind regards,
Chris