Just to be clear, my answer to this question would be that no deduction is allowable. I am just hoping someone knows of a precedent or justification that will prove me wrong.
Client previously employed in an unrelated field undertakes a course in close protection security. Subsequently takes an additional course in firearms to augment their close protection skills. Sole trader and all this happened prior to their original contact with us, so suggesting running through a company not an option.
Is there any way of claiming a deduction for either of these courses? Each course is over £1k, though I doubt that makes any difference to the deductibility position.
Replies (8)
Please login or register to join the discussion.
I'm not sure this will help ...
I tell clients that training for new skills is not allowable as it would be too open to abuse, ie, there would be lots of 'would-be' racing car drivers, sailors, jockeys, fire-arm experts, parachutists, etc. getting fun training on the premise that they intended turning it into a business, and then find that they failed to make the grade.
The new skill (if achieved) gives more earnings potential, and that should be reason for the expense.
I wonder
Were both courses taken prior to the commencement of the trade or was the firearms course after commencement?
A punt
Only in the respect, as has been subsequently mentioned, that the 2nd course provides an enhancement of the skill set already present to undertake the trade.EDIT @andy.partridge. I can check, but I believe they were both undertaken prior to commencement. If that is not the case, how do you think that changes things?
No links
I can't link to any precedents or case law, but is there an argument for the firearms course to be allowed on the basis that the new skill was the 'close protection' and that the firearms training is sufficiently related to it?
Like I said, nothing I can point to in support but just suggesting a possible justification.
Cash basis & pre-trading expenditure
HMRC argue that expenditure on acquiring new skills is capital expenditure; indeed they've argued it in front of the Special Commissioners and won on that basis, although I can't immediately remember the name of the case.
Under the cash basis, relief is, of course, permitted for capital expenditure and of course pre-trading expenditure is all treated as having been incurred on day 1. Just saying!
In my view HMRC's capital argument is incorrect. It's not an asset of the business that's being improved, but the proprietor himself. Their argument should be a "wholly and exclusively" one, but it isn't.