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Success fee

02 October 2012
Issue: 4373 / Categories: Forum & Feedback , Income Tax , VAT
Two years ago, a sole trader property development consultant advised on the sale of land for redevelopment to a client and was paid his full fee for this. The landowner has now sold the property for a considerable sum and consideration is given to whether an unexpected success fee paid to the adviser is taxable

An estate agent who is also a property development consultant with his own practice operates as a sole trader.

Two years ago he advised one of his clients on the possibilities for selling a plot of land for redevelopment and gave advice on how to present an application for outline planning permission.

He charged a fee at his agreed rate which was duly paid and nothing further was expected although the client did say informally at the time that if he was able to persuade the council to agree the plans he would let the agent have a “success fee”.

The application was successful and in fact the client has now realised a considerable sum of money from the sale to a local developer.

He was so grateful for the advice given that the client has generously sent a cheque for £10 000 made...

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