Hopeful training question

Hopeful training question

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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)

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Stepurhan
By stepurhan
01st May 2014 10:38

As I thought

Guess no-one can prove me wrong. Always the way when you'd prefer a different answer. Guess I'd better get ready for that always fun conversation about non-deductible expenses the client is sure should be included. Any fresh thoughts on how to explain why an expense the client, not entirely unreasonably in this case, sees as business-related isn't deductible for tax?

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By ShirleyM
01st May 2014 11:38

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.

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By andy.partridge
01st May 2014 11:38

I wonder

Were both courses taken prior to the commencement of the trade or was the firearms course after commencement?

 

 

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Stepurhan
By stepurhan
01st May 2014 11:41

Actually using skills

Alas, the training was undertaken not only with a view to turning it into a business but it was actually required to start the business. To be certified under the SIA, you need to prove competence. Also it is not a skill you can get a lot of fun using. Not that I think this makes it any more allowable, but this is undoubtedly the view the client will take. This is not just speculation, as he has indicated as such in ensuring I was aware of the second course.

Perhaps I shall just have to fall back on "That's the law unfortunately".

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?

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Replying to tonycourt:
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By andy.partridge
01st May 2014 12:39

A punt

stepurhan wrote:

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?

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.
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By mwngiol
01st May 2014 11:43

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.

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By Steve Kesby
01st May 2014 12:01

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.

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Stepurhan
By stepurhan
01st May 2014 12:22

Same effect

I believe their argument is based on it being capital expenditure for which there are no capital allowances, and hence no tax deduction. By avoiding using the "wholly and exclusively" angle, they avoid getting into arguments where, usually due to legal requirements, training has to be undertaken for the business to even exist. If certain training is required for the business to operate, there is some argument for it being wholly and exclusively incurred for the business. After all, whilst limited, corrective surgery has been accepted as for business purposes in at least one case.

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