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18A.4 Reflections |
The test of deductibility under TA 1988, section 198 is strict, even severe. A particularly strong example of this is Eagles v Levy 123where the employee had to sue his employer to recover wages due to him and was not allowed to deduct the costs of the action. Such costs were not incurred in the course of the performance of his duties. The self—employed could presumably deduct the costs of pursuing a trade debtor. |
The restrictive nature of the test of deductibility has often been commented upon, usually adversely,124 and it remains true that the test appears to be much stricter than that laid down under schedule D, cases I and II where the requirement is that the expenditure be wholly and exclusively for the purposes of the business.125 |
A good example of the discrepancy is Hamerton v Overy126 where a full—time anaesthetist sought to deduct the cost of maintaining a telephone, a maid to take messages, a subscription to the Medical Defence Union and the excess of his car running expenses over his allowance received from his employers. All these items would have been deductible he had been in private practice under schedule D, case II; none were deductible under schedule E. |