Tax Deductibility of Legal Expenses When Cake is Involved

It is rarely an edifying sight seeing lawyers line up against each other, especially when it is over cake.  But just that has happened as M&S have alleged Aldi’s Cuthbert the Caterpillar cake infringes their trademark for their Colin the Caterpillar cake.

We are also left wondering if, quaking in their boots, are Wiggles, Curly, Charlie, Cecil, Clyde and Morris, at the prospect of seeing a pre-action letter from M&S’s legal team alleging further trademark infringement.

Rumours that M&S are being legally represented by Connie the Giant Caterpillar to look after little brother Colin are unfounded as are Aldi’s appointment of Kevin the Carrot to be on the side of Cuthbert.

There is however a received wisdom that it is only the lawyers who win in a legal dispute, although in this case the marketing executives at M&S and Aldi must be rubbing their hands in glee given the acres of free advertising secured in this unseemly dispute.

And of course, the other loser will be HMRC as if M&S and Aldi can show their legal expenses were incurred for the purposes of their business, as would seem likely, tax relief for these expenses will also be given against their corporation tax liabilities.

So in one sense, it could be said both M&S and Aldi are having their cake and eating it.

In the meantime, the judiciary will have to wrestle with the issue of whether there is any confusion between Colin and Cuthbert, or if we should allow everyone to have caterpillar cakes and let the consumer decide which is best.