Deductibility of business expenses: an overview

Three recent First-tier Tribunal cases regarding the deductibility of business expenses have lessons to offer accountants, say Gabelle

Taking the examples of the McLaren Racing Ltd v HMRC, Interfish v HMRC and Grant Bowman v HMRC, in which HMRC won all bar McLaren, the tax consultants highlighted factors practitioners should take into account when considering the deductibility of expenditure. 

Gabelle director Martin Mann said these include the exclusivity of the expenditure for the purpose of the trade and whether it was revenue or commercial in nature. 

Here are a few recommendations Mann warned practitioners to watch out for: 

  • Expenditure: Revenue or capital in nature?
  • Wholly and exclusively
  • McLaren: Lead to similar cases?

Continued...

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Comments

International Trading Businesses    1 thanks

philfromleeds | | Permalink

I feel HMRC should start disallowing overcharges from a foreign business or subsidiary to the UK Business in respect of goods or services or management charges. They seem to pick on the weak/ small business. It is about time they started employing more staff to protect our Nations Finances. Amazon and Starbucks must be told we do not need you. You need us, that being our custom.

Now Google is an interesting organisation. Due possibly to reasons of security their technical department for a country may be in a different country to that which it serves. The Sales department will be based in the local country. These departments are diffent companies. Tax authorities in different countries must be having a very hard time evaluating the truth which is presented to them. They probably give up thinking that their is a greater good of local employment being created.