Lorber v HMRC: Score draw at tax tribunal

The tangled personal life of Paul Lorber landed him in two personal tax tribunal cases at the same time. In its April episode, TAXtv looked at the cases that covered both Section 336 and 660 issues and resulted in two very different outcomes.

Presenter Tim Good explained that the first case (TC00986) centred on the “element of duality” where PA Lorber, working in his role as a local councillor, claimed a deduction against his income in respect of various expenses.

His claims tangled with the restrictions in Section 336, but prompted a recognition from the Tribunal that “in some cases there can be an element of personal benefit, such as will not deny the whole of the relief being allowed for tax”, Good explained.

The expenses were for childcare costs, subscriptions and communications expenses. On top of that Lorber claimed one sixth of the costs he incurred working at home in connection with his duties as a councillor.

The Tribunal decided that the childcare costs and subscriptions were not tax deductible, as they were not incurred “wholly, exclusively and necessarily” in the performance of the duties; but sided with Lorber regarding the communications expenses.

Good explained the principle and implications: “The Revenue argued that part of that expense was going to benefit the political party of which Mr Lorber was a member and therefore not connected with his office as a local councillor. But the tribunal held that that benefit was incidental and did not therefore taint the deductibility of the communication expenses as a whole.”

The tribunal ended up agreeing with Lorber regarding the use of part of his home for his duties as a councillor and agreed that he should have a deduction as he had in previous years for one sixth of the actual costs, amounting to £335.

The second case TAXtv discussed (TC00977) concerned the settlements legislation and how it applied to Lorber’s “somewhat chequered family background”, as Good put it. The case related to interest on a joint bank account Lorber continued to hold after separating from his wife, as well as interest on bank accounts and building societies for the benefit of their two children.

Visit shop@accountingWEB to subscribe to TAXtv. TAXtv's free Budget round-up is also available, in which Tim Good, Giles Mooney and Neil Warren explain the key points of this year's announcements.

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