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- Expenses incurred for an office or employment under schedule E will be deductible only if they conform to the strict test laid down in TA 1988, section 198; expenses incurred for a trade or profession will be deductible on a different and less niggardly test. By concession, travelling expenses of directorships held as part of a professional practice are allowed as deductions under schedule D.79
In Mitchell and Edon v Ross80 the taxpayer, Ross,
held an appointment as a consultant radiologist under the Birmingham Regional
Hospital Board, and served at a number of hospitals under that authority.
He was also in private practice as a consultant radiologist, which practice
he carried on at his home in Rugby. The Revenue admitted that Ross was
correctly assessed under schedule D, case II in respect of his private
practice but argued that income accruing from the hospital board should
be assessed—and so calculated—as employment income.
At first instance and in the Court of Appeal,81 the taxpayer argued
unsuccessfully that the positions with the hospital board were not offices. He further argued that if the income was correctly assessable as employment income, the employment should nonetheless also be seen as part of his profession under schedule D,
case II, so that the schedule D rules for deduction of expenses should apply to permit the deduction of those expenses
which were not deductible from employment income. This rested, in part, on a finding by the Commissioners that these
employments were a necessary part of his profession as consultant radiologist and merely incidental to that profession.82
Only the second point was argued in the House of Lords, and the taxpayer lost. The House held that if the profits were
assessable as employment income, then expenses in respect of that employment could be allowed only if they conformed
to the requirements of ITEPA; the appointment could not be treated for tax purposes as part within and part outside the
schedule. 83
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