Xin Shang Enterprise (XSE) is incorporated and registered in Mainland China and closes its account on 31 March every year. XSEs principal business is the sale of own manufactured TV sets. In January 2020, XSE acquired a subsidiary in Hong Kong, namely Moving Fast Limited (MFL). MFL was incorporated in Hong Kong in 2004 and has been engaged in the retailing of electrical appliances for many years. After the acquisition, XSE injected a new business line of trading of TV sets to MFL. For the trading business, XSE accepted all the sales orders and instructed MFL to issue the invoices and arrange the necessary payment and receipts in Hong Kong. The purpose of putting through the trading transactions through MFL was to circumvent the trade restrictions of the countries where customers were located.

The profit and loss account of MFL for the year ended 31 March 2021 showed the following information:

Profit from retailing business	HK$2,500,000
Profit from trading business	$3,000,000
Interest income from a deposit with ABC Bank	100,000
Legal and professional expenses	1,200,000
Interest expense	400,000
Contribution to MPF	500,000
Business tax (PRC)	50,000

Further information for the following expenses:

A break-down of the legal and professional expenses of HK$1,200,000 is as follows:

Legal fees incurred on raising capital	HK$100,000
Accountancy and tax services fees	600,000
Legal expenses incurred on resolving breach of contracts	200,000
Legal fee incurred in renewal of leases	120,000
Compensation payment to an ex-employee for his promise not to work for another competitor in the same industry for 12 years	180,000

The contribution to MPF of HK$500,000 includes a provision for special contribution of HK$100,000.

Business tax (PRC) of HK$50,000

The business tax was paid in respect of annual product innovation and design services provided by XSE in tthis regard.

Required:

Discuss (with explanations) the deductibility of the above expenses from the Hong Kong profits tax perspective.