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?