HMRC state in the Code of Practice that taxpayers are responsible for their own costs incurred in dealing with an investigation. The ICAEW, in their response to the Consultation paper, say that they believe that, where an investigation fails to uncover evidence of serious tax fraud, the professional costs of dealing with the investigation should be admissible as a deduction for tax purposes.
Statement of Practice, SP 16/91 permits the deduction of accountancy fees where an enquiry results in no addition to profits for the year of enquiry. As SCI enquiries are not into a particular year, the costs of dealing with them do not, therefore, strictly fall within the Statement of Practice.
It would be very exceptional for an enquiry by SCI to result in no addition to profits so SP 16/91 is unlikely to be an issue. Similarly it is unlikely, but not to be wholly discounted, that the taxpayer may incur accountancy fees due to a serious error on the part of SCI so that fees can be reimbursed under COP1.