Once again the tax return maelstrom has passed, and we accountants can have a breather. Therefore, I thought we would take a look at the lighter side of life. The tax office has recently published some of the “dubious” expense claims received and which were rejected. They have even made a film about them, and this can be seen at https://youtu.be/wbGhdPKfzQU.
The rejected expenses include a claim for – a TV and sound bar which was to help the trader price up jobs, – woolly underwear, and – a music subscription so that the trader could listen to music whilst they worked.
We have had personal experience of – a sub-contractor (male) trying to claim for a sports bra and tennis dress as protective clothing, as well as – a bricklayer claiming for a fortnight in August on the Isle of Wight, double room and a twin-bedded room, as conference expenses.
The claim for woolly underwear illustrates the hurdles that are placed in the way of claiming tax relief on any expense that could have a personal element. It is not difficult to understand that for someone working in an exposed location these items make working in the winter more comfortable.
However, for any expense to be tax deductible by someone in business then it must be “wholly and exclusively” incurred for the business. Any personal element precludes a deduction. This excludes most “normal” clothing which is necessary to protect the wearer’s modesty.
For people in employment, as opposed to self-employment, the hurdles are even higher. For them, the expense must be “wholly, exclusively and necessarily” incurred, which essentially means that not only must there be no personal element in the expense but the expense must be so fundamental that it would be impossible to perform the duties of the employment without them being incurred.
This does not mean, however, that incurring the expense must be unenjoyable before it can be claimed. As an example, we do recall the case of a photographer who successfully claimed for the cost of chartering a luxury yacht in the Caribbean for a fortnight which he shared with a bevy of beauties, as well as the travel costs in getting there from the UK. The time was spent in taking photos of the beauties on the yacht in various locations for a calendar that was subsequently published.