Employment Income: Deductions and Expenses

31

Endnotes


1 FA 1998, s 61, superseding an earlier effort in FA 1997, s 62.
2  In Bevins v McLeish [1995] STC (SCD) 342, the taxpayer unsuccessfully argued for relief for expenditure that had not actually been made.
3 In Harrop v Gilroy [1995] STC (SCD) 294 a taxpayer unsuccessfully argued for expenses to be relieved against unemployment benefit.
4  The horse was introduced in 1853 (see 116 and 117 Vict c 34, s 51); on its Trojan characteristics, see Lord Reid in Taylor v Provan [1974] STC 168, 175, [1974] 1 All ER 1201, 1206 49 TC 579, 605. For another view of the horse, see Pollock MR in Ricketts v Colquhoun [1925] 1 KB 725, 732. See also Elderkin v Hindmarsh [1988] STC 267, 60 TC 651.
5 ITEPA s 328(2)–(5).
6 ITEPA ss 329 and 332.
7  Based on TA 1988 s 835(4) and (5) (ITEPA ss 23(3) and 381).
8 ITEPA s 337, ex TA 1988, s 198(1B).
9  Ibid, s 340.
10 Ibid, s 340(6); one may be a 51% subsidiary of the other, or both may be 51% subsidiaries of a third company.
11 Ordinary commuting or private travel is defined in ITEPA s 338, ex TA 1988, sch 12A.
12 ESC A58, A59, A66 (revised 1999).
13 ESC A65 and RI 73.
14 RI 99.
15 Cook v Knott (1887) 2 TC 246; Revell v Elsworthy Bros & Co Ltd (1890) 3 TC 12; Andrews v Astley (1924) 8 TC 589; Ricketts v Colquhoun [1926] AC 1, 10 TC 118.
16 Burton v Rednall (1954) 35 TC 435. It is interesting to compare the position in tort when the question is whether an employee is acting in the course of his employment (see Smith v Stages [1989] AC 928, [1989] 1 All ER 833, HL).
17 [1926] AC 1, 7, 10 TC 118, 135 (cf Lord Salmon in Taylor v Provan [1975] AC 194, 227, 49 TC 579, 622).
18 Ward [1988] BTR 6.
19 (1969) 45 TC 571.
20 [1974] STC 168, [1974] 1 All ER 1201, 49 TC 579.
21 See Ward [1988] BTR 6.
22 [1926] AC 1, 10 TC 118.18A.
23 Ibid, 4, 133, per Lord Cave LC.
24 Ibid, 7, 135, per Lord Blanesburgh. Cf Lord Salmon in Taylor v Provan [1974] STC 168, 190, [1974] 1 All ER 1201, 1223, 49 TC 579.
25  [1969] 2 All ER 1, 45 TC 571. Owen v Pook was distinguished in Bhadra v Ellam [1988] STC 239, Parikh v Sleeman [1988] STC 580 (upheld on narrower grounds, [1990] STC 233, CA) and Knapp v Martin [1999] STC (SCD) 13 (all cases concerning the medical profession).
26 See Lord Guest, 45 TC 571, 590, Lord Pearc, 591 and Lord Wilberforce, 596.
27 Ibid; see Ward [1988] BTR 6, 14, 15.
28 [1974] STC 168, [1974] 1 All ER 1201, 49 TC 579.
29 Ibid, 177, 1210, 609.
30 Ibid, 191, 1224, 623.
31 Ibid, 174, 1207.
32 This emerges from ibid, 174, 1207, 605.
33 (1930) 15 TC 380.
34 See, generally, Ward [1988] BTR 6.
35 [1965] 2 All ER 364, 42 TC 326; see also Perrons v Spackman [1981] STC 739 where it was held that a mileage allowance was an emolument of the taxpayer’s employment, since it included a significant contribution to the overhead costs of putting a car, which was maintained for both private and official use, on the road and could not therefore be a mere reimbursement of expenses actually incurred.
36 , 33 [1965] 2 All ER 364, 367, 42 TC 326, 331. One may add that of these the status of the officer looks extremely odd and the Revenue’s own scale of allowances made to Marsden, which gave, depending upon the type of business on which he was engaged, two quite distinct allowances, makes a nonsense of some of the arguments used by the Inland Revenue in these cases.
37 [1969] 2 All ER 1, 12, 45 TC 571, 596.
38 TA 1988, s 198A, proposed to be added by FA 1997, s 62 but repealed by FA 1998, s 61 without having ever coming into effect. See Inland Revenue Press Release, 8 April 1998, (1998) Simon’s Tax Intelligence 602.
39 ITEPA s 339(2), (3), ex TA 1988, sch 12A, para 4.
40 ITEPA s 339(4), (7), ex TA 1988, sch 12A paras 6, 7.
41 ITEPA s 337(2), (3) (5), ex TA 1988, sch 12A, paras 4, 5.
42 ITEPA s 338(3), ex TA 1988, sch 12A, para 2(1).
43 ITEPA s 338(2), ex TA 1988, sch 12A, para 3.
44 ITEPA s 338(4), ex TA 1988, sch 12A, para 2.
45 Ie a place at which the employee’s attendance is necessary in the performance of the duties of the employment (ibid, s 339(1), ex TA 1988, sch 12A, para 2(3)).
46 Ibid, s 338(4), ex TA 1988, sch 12A, para 3.
47 IR booklet IR161, para 5.14.
48 Ibid, para 5.15.
49 Based on ibid, para 1.11.
50 Added by FA 1995, s 93. The exclusion is effective for TA 1988, ss 141 (non-cash vouchers: s 141(6C)), 142 (credit tokens: s 142(3C)), s 153, 155(1B), (1C) (charge under s 154).
51 Ibid, s 241 ex TA 1998, s 200A(1)–(3). However, some provisions allowing the deduction of travel expenses do not open the door to s 241—these are listed in s 240(7) as excepted foreign travel provisions and ss 371, 374 and 376.
52 ITEPA s 240(4)–(6).
53 ITEPA s 237, ex s 197A.
54 Ss 291 (termination payments) 292 (overnight expenses).
55 ITEPA 294, ex TA 1988, s 200 amended by FA 1993, s 124.
56 ITEPA ss 293 and 294, ex FA 1999, s 52.
57 Originally TA 1988, s 197AA(1), (2), added by FA 1999, s 48.
58 ITEPA s 242(3), ex TA 1988, s 197AA(3), (8).
59 ITEPA s 243(2), ex s 197AA(2).
60 ITEPA s 249, ex s 197AA(3), (7).
61 ITEPA ss 242(1) and 249 referring to s 339, ex s 197AA(4), (7).
62 ITEPA s 242(1)(c) replacing the hideously worded TA 1988, s 197AB(4).
63 Children are defined in ibid, 242(2), ex s 197AA(5); they must not be over 17.
64 ITEPA s 243 originally added by FA 1999, s 49.
65 ITEPA s 243(1).
66 ITEPA s 243(3).
67 ITEPA s 237(3), ex FA 1999, s 50; cycle and motor cycle are defined by reference to the Road Traffic legislation (s 244(5), ex s 46(3)) and include tricycles as well as bicycles.
68 Originally TA 1988, s 197AC(1), (5), added by FA 1999, s 47(1).
69 S 244(3), a great improvement on the original drafting in TA 1988, s 197AC(4). See original text.
70 CAA 2001 s 36 as amended by FA 2001 s 59, Inland Revenue Notes to Finance Bill 1999, cl 47 (which became FA 1999, s 50).
71 ITEPA s 229 replacing TA 1988 ss 197AD–197AG; earlier and rather different rules were contained in ss 197B–197F.
72 ITEPA s 230.
73 FA 2001 s 59 amending CAA 2001, s 36.
74 Lomax v Newton (1953) 34 TC 558, 561–2.
75 Lupton v Potts [1969] 3 All ER 1083, 45 TC 643; Elderkin v Hindmarsh [1988] STC 267, 60 TC 651.
76 Bowers v Harding [1891] 1 QB 560, 3 TC 22; Halstead v Condon (1970) 46 TC 289.
77 Simpson v Tate [1925] 2 KB 214, 9 TC 314, Rowlatt J.
78 ITEPA s 343(1) TA 1988, s 201; the list of professions in 343(2) now includes health professionals, legal professionals, ie licensed conveyancers and driving instructors but not lawyers or accountants; this does not prevent people in self-employment from deducting these costs. A list of approved societies is available from the Inland Revenue for £5; see (1998) Simon’s Tax Intelligence 986. On fees for solicitor’s practising certificates, see notice by the Law Society, 24 February 1993, (1993) Simon’s Tax Intelligence 341.
79 ITEPA s 343 and 344.
80 HC Written Answer, 30 March 1990, (1990) Simon’s Tax Intelligence 317.
81 ITEPA s 352 (TA 1988, s 201A, added by FA 1990, s 77, as amended by FA 1991, s 69).
82 Humbles v Brooks (1962) 40 TC 500; but contrast ESC A64 and Individual Learning Accounts (above ch 15).
83 (1962) 40 TC 500, 504. Even if this distinction had been ignored the expenditure might have failed on the ground of necessity since it was possible that a properly qualified history teacher could have been appointed who would not have needed to attend the course.
84 Sanderson v Durbidge [1955] 3 All ER 154, 36 TC 239; nor could the recorder in Ricketts v Colquhoun [1926] AC 1, 10 TC 118.
85 Newlin v Woods (1966) 42 TC 649, 658.
86 [1994] STC 237, 66 TC 407, HL.
87 Technically, they were claiming under s 198 in order to escape from a charge under ch 3 part 3 (ex TA 1988, s 153) in respect of an allowance to cover these items.
88 [1994] STC 237, 245b, 244a, 247d; 66 TC 407, 524, 522, 527, respectively.
89  Ibid, 245j, 524.
90 Ibid, 243b, 521.
91 Ibid, 247a, 526.
92 Ibid, 244a, 522.
93 Ibid, 242e, 520.
94 Ibid, 248, 255, 528, 536; the fifth member of the Committee, Lord Keith, agreed with Lord Templeman.
95 Ibid, 254, 535.
96 Ibid, 247–8, 527.
97 Ricketts v Colquhoun [1926] AC 1, 10 (seen above at „18A.2.1). But if the taxpayer is the only person capable of doing the job, different questions arise (Taylor v Provan [1974] STC 168, [1974] 1 All ER 1201, 49 TC 579; see above at „18A.2.2).
98 Roskams v Bennett (1950) 32 TC 129.
99 But the fact that an employer has not sanctioned it greatly weakens the taxpayer’s case; see Owen v Burden [1972] 1 All ER 356, 358, 47 TC 476, 481 (county surveyor unable to deduct cost of journey to Japan to attend world road congress) and Maclean v Trembath (1956) 36 TC 653, 666.
100 Brown v Bullock (1961) 40 TC 1, 10.
101 Blackwell v Mills [1945] 2 All ER 655, 26 TC 468. He was not performing his duties as a laboratory assistant when he was listening to the lecture (see p 470).
102 Lomax v Newton [1953] 2 All ER 801, 34 TC 558; Griffiths v Mockler [1953] 2 All ER 805, 35 TC 135. A major in the Royal Army Pay Corps would have been subject to disciplinary action if he had not paid, but mess membership was not necessarily in the performance of his duties as an officer.
103 [1961] 1 All ER 206, 40 TC 1. Counsel for the bank manager conceded that his client could still perform the duties of a bank manager even though he had not been a member of the club.
104 (1965) 42 TC 482.
105 Griffiths v Mockler (1953) 35 TC 135 at 137.
106  Elwood v Utitz (1965) 42 TC 482, 498, per Lord MacDermott CJ.
107 42 TC 482, 497, relying on cases decided under schedule D, Case II—but before Mallalieu v Drumond [1983] STC 665, 57 TC 330.
108 By analogy with Mallalieu v Drummond, ibid, and subject to the same exceptions.
109 Hillyer v Leaks [1976] STC 490, 51 TC 590; Woodcock v IRC [1977] STC 405, 51 TC 698; and Ward v Dunn [1979] STC 178, 52 TC 517.
110 Lucas v Cattell (1972) 48 TC 353.
111 TA 1988, s 577(1)(b).
112 Ibid, s 577(3).
113 ITEPA part 12, ss 713 et seq TA 1988, s 202, as amended by FA 1996, s 100 and FA 2000, s 38. Payment can be made through an agency charity approved by the Revenue (ITEPA s 714(2), TA 1988, s 202(7)).
114 FA 2000 s 38.
115 ITEPA s 347(2) TA 1988, s 201AA, added by FA 1995, s 91. For the Revenue interpretation of the provisions, see Revenue Interpretation RI 131.
116 FA 1995, s 92.
117 Ibid, s 92(6)–(8).
118 ITEPA s 369(3).
119 ITEPA s 362(1).
120 ITEPA s 362(2)
121 ITEPA ss 363–365.
122, 105 Previously FA 1989, ss 50–52; apportionment is directed where there is dual purpose (s 51); for the Revenue view on scope, see ICAEW Memorandum TR 759, (1989) Simon’s Tax Intelligence 719.
123 (1934) 19 TC 23.
124 Rowlatt J in Ricketts v Colquhoun (1924) 10 TC 118, 121; Croom Johnson J in Bolam v Barlow (1949) 31 TC 136, 129; Danckwerts J in Roskams v Bennett (1950) 32 TC 129, 132; Harman LJ in Mitchell and Edon v Ross [1960] ch 498, 532, [1960] 2 All ER 218, 232, 40 TC 11, 51. But cf Lord Radcliffe in Mitchell and Edon v Ross [1962] AC 814, 841, [1961] 3 All ER 49, 56, 40 TC 11, 62; and Rowlatt J in Nolder v Walters (1930) 15 TC 380, 389.
125  See Lord Evershed MR in Brown v Bullock (1960) 40 TC 1, 9. However, note also Brodie, Tax Line (May 1995), 7 citing an instance where the schedule E tax payer could deduct an expense where the schedule D taxpayer could not, because the former came within a Revenue agreement.
126 (1954) 35 TC 73.
127 See MacDonald [1978] BTR 75, commenting on Sargent v Barnes.
128  TA 1988, s 100.
129 [1998] STC 267.
130 (1970) 46 TC 289.
131 [1969] 3 All ER 1083, 45 TC 643.
132 For some there is at least a published extra-statutory concession: see ESC Al (flat rate allowances for costs of tools and special clothing). Other reliefs depend on agreements between the Revenue and various trades unions, the results being made available to their members.
133 This was thought to be outside s 198 in Roskams v Bennett (1950) 32 TC 129, but inside s 198 in Elwood v Utitz (1965) 42 TC 482, 495.

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