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| 17A.3.7 Apportionment of Expenditure |
If the expense is incurred by the employer partly to provide a benefit for the employee and partly for other purposes, TA 1988, section 156(2) states that only a proper proportion of the expense so incurred will be caught by section 154. |
In Westcott v Bryan86 a managing director wished to live in London but the company insisted that he live in a large rambling house set in 2 acres of garden close to the factory in a rural area of North Staffordshire. He paid the company a rent of £140 p.a. and £500 p.a. for services and also paid the rates. In the tax year the company spent £1,017 on gas, electricity, water, insurance of contents, telephone, cleaning, window cleaning, gardener’s wages and maintenance. The house was bigger than the taxpayer either needed or desired, but no specific area was set aside for the entertainment of the company’s guests. The Court of Appeal held that an apportionment under what is now ITEPA section 204 (ex TA 1988, section 156(2)) should be made even though the expenses could not clearly be severed either on a temporal or spatial basis. The method of apportionment was not canvassed in the Court of Appeal,87 but at first instance Pennycuick J had said that apportionment could only be calculated on a rough-and-ready basis, to determine what proportion of the total expense was fairly attributable to the use or availability for use of the house by the company.88 |
17A.3.7.1 Distinctions |
Where a particular expense benefits both employer and employee, and no part of the expenditure is on something which benefits the employer exclusively, no apportionment can be made. In Rendell v Went89 (the driving case) the employer had spent a sum of money in the provision of a benefit when the employee, E, would have spent less, and no part of the sum was spent on something which did not |