8. Employment Income - expenses

Question 1

Steps to do before talking about expenses

Answer 1

s. 11 = net taxable earnings are taxable earnings takeaway allowable deductions
s. 327 - deductions for E’s expenses are allowed
s. 336 - general rule for expenses

Question 2

MODIFICATIONS of general principles

Answer 2

ALLOW deduction of SUBSCRIPTIONS to professional bodies - s.343, s.344

DISALLOW BUSINESS ENTERTAINMENT EXPENSES - s.356

TRAVEL EXPENSES dealt with separately in s.337

Question 3

S.336 - THE GENERAL RULE

Answer 3

Wholly and exclusively

necessarily

incurred in performance of duty

Question 4

Browne v Bullock

Answer 4

necessarily

• necessity isn’t necessarily obliged by employer, it is necessarily obliged by employMENT
• obliged to incur by employer doesn’t mean it is necessary

Question 5

Simpson v Tate

Answer 5

doctor subscriptions - doing it in preparation of duties, NOT IN PERFORMANCE so not an expense

overruled b s.343/344 now

Question 6

Smith v Abbott

Answer 6

journalist subscriptions - reimbursements are TAXABLE and not an expense under s.336

• not in performance of duties (only in preparation)
• s.336 is STRICTLY INTERPRETED, if it only goes to aid performance but not to performance itself = not good enough

Question 7

Perrin v HMRC

Answer 7

COE said accountant had to pay for course before he was qualified and employed

• payment for the course is not s.336
• not his JOB to qualify, so NOT IN PERFORMANCE OF DUTIES
• it was a CONDITION of his job to qualify

Question 8

HMRC v Banarjee

Answer 8

qualification was part of her job - she was employed under a TC

• whole purpose of attending was because she was contractually required to do so
• DE because incurred in performance of duties
• if training is part of your job = DE (here yes, she was contractually required to attend)
• no duality of purpose

Question 9

Roskam v Bennett

Answer 9

obliged to work at home because he couldn’t drive due to defective eyesight - tried to deduct a % of household expenses

• not DE

Question 10

Humbles v Brooks

Answer 10

headmaster obliged to attend a course to improve background knowledge

• payment for course NOT DE

Question 11

Hillyer v Leeke

Answer 11

payment for suit to wear only for work

• NOT DE not wholly and exclusively because it also provided cover and warmth

Question 12

Ainsell v Browne

Answer 12

dietary supplements for rugby player - cost of that

NOT DE - it is preparation of duties not in performance of duties

Question 13

Snowdon v Charnock

Answer 13

psychiatrist claimed DE for cost of personal psychotherapy sessions (required for him to qualify as a psychotherapist)

• NOT DE
• incurred for further qualifications NOT in performance of duties
• just for promotion

Question 14

TRAVELLING EXPENSES

Answer 14

s. 337 - performance of duties

s. 338 - necessary attendance

Question 15

Ricketts v Colquhoun

Answer 15

barrister held office as Recorder of Portsmouth

• DE of travel expense?
• NOT DE
• he chose to live in LONDON
• cost is expended due to his CHOICE of where to reside
• personal elements is the reason for cost
• so not necessarily incurred in performance of duties

Question 16

Owen v Pook

Answer 16

medical practitioner held 2 posts 15 miles away - he would be on stand by duty at certain times

• he was responsible for patient as soon as he received the call
• travel expense DE?
• YES DEDUCTIBLE
• whole journey is deductible because he was under performance as soon as he took the call (as he was responsible for the patient)

Question 17

Taylor v Provon

Answer 17

Canadian citizen residing in Toronto for his main job - as expert in the world on expansion by merger, he advised some UK companies and consequently was awarded by “reason of prestige” the director of companies

• visits to UK, travel expense deductible?

YES

1) only person who could do the job
2) his main job was in Canada

RARE scenario
UK role = prestige role, so travel is NECESSARILY incurred (he had to come from Canada) - not like Ricketts where anyone could do the job

Question 18

Kirkwood v Evans

Answer 18

Norfolk home working scheme - travel to Leeds office twice a week = deductible?

NO - it was ordinary commuting! he made his own choice to work from home and live in Norfolk

• E wasn’t uniquely qualified like the Canadian in Taylor v Provon
• bills not deductible either because home working scheme was optional

Question 19

Hazel Patricia v Revenue

Answer 19

E worked from home for part of the week - not required by R but R provided office equipment

• E was reimbursed receipts for travel to and from London
• DE?
• NO DE
• working from home by choice is not sufficient to say travel from home to office is deductible
• s.338 = reduces harshness of s.337
• travel is not travel from 2 offices
• nothing about e’s duties that required E to work from home so cost expended isn’t necessarily occurred in performance of duty