Ansell (Inspector of Taxes) v Brown
| Jurisdiction | England & Wales |
| Judgment Date | 23 May 2001 |
| Date | 23 May 2001 |
| Court | Chancery Division |
Chancery Division.
Lightman J.
Kate Selway (instructed by the Solicitor of Inland Revenue) for the Crown.
Gareth Morley (instructed by David Edward Rees & Co, Rhondda Cynon Taff) for the taxpayer.
The following cases were referred to in the judgment:
Brown v Bullock (HMIT) WLRTAX[1961] 1 WLR 1095; (1961) 40 TC 1
Fitzpatrick v IR Commrs (No. 2) TAXWLRTAX[1994] BTC 66; [1994] 1 WLR 306; (1994) 66 TC 407
Simpson (HMIT) v Tate ELRTAX[1925] 2 KB 214; (1925) 9 TC 314
Taylor v Provan (HMIT) ELRTAX[1975] AC 194; (1974) 49 TC 579
Income tax - Employment - Emoluments - Deduction - Expenses necessarily incurred in performance of office or employment - Professional rugby player - Dietary supplements purchased to maintain physical fitness - Whether cost of supplements wholly, exclusively and necessarily incurred in performance of duties as rugby player - Income and Corporation Taxes Act 1988 section 198 subsec-or-para 1Income and Corporation Taxes Act 1988, s. 198(1).
This was an appeal by the Inland Revenue by way of case stated against a decision of general commissioners that expenditure on dietary supplements by a professional rugby player to maintain his physical fitness was allowable as a deduction under Income and Corporation Taxes Act 1988 section 198s. 198 of the Income and Corporation Taxes Act 1988 in calculating the player's tax liability, as it was wholly, exclusively, and necessarily incurred in the performance of his duties as a rugby player.
The taxpayer was employed by a Premier Division club. By his employment contract, he agreed to serve the club by playing to the best of his ability and to maintain at all times a high standard of physical fitness. To achieve that and increase body mass and muscle, he purchased vitamin supplement and carbohydrates from health food shops and manufacturers. The tax inspector disallowed the expenditure incurred in purchasing the dietary supplements in the sum of £173, as it was not wholly, exclusively, and necessarily incurred in the performance of his duties. The general commissioners allowed the taxpayer's appeal against that decision. The Revenue appealed to the High Court.
Held, allowing the appeal:
1. The conditions for entitlement to a deduction underIncome and Corporation Taxes Act 1988 section 198s. 198 were stringent, exacting, and rigid. A relaxation would have the effect of distorting the imposition of income tax and would make the amount of any expenses claimed depend on the choice of the individual taxpayer. (Fitzpatrick v IR Commrs (No. 2) TAX[1994] BTC 66; [1994] 1 WLR 306 considered.)
2. The expense had to be incurred in the performance of the duties of the office. It was not sufficient that the employer required the employee to incur the expenditure. The duties themselves must oblige the employee to incur the particular outlay. The expenditure must be one which the employee was necessarily obliged to incur in the performance of the duties of the employment; it must be imposed on anyone and everyone employed to perform the duties in question by the requirements or necessities of being so employed. It was not sufficient that the expenditure was incurred to enable the office holder to perform his duties. (Taylor v Provan ELR[1975] AC 194 applied.)
3. In the present case, the commissioners had concentrated their attention on the words "wholly, exclusively, and necessarily", but failed to give any attention to "in the performance of those duties". It was plain that the expenditure on supplements was incurred for the purpose of achieving and maintaining the required level of fitness and the required size and physique for a back-row forward. But that did not constitute an expenditure in the performance of his duties as an employee of the club. In particular it was an expenditure incurred to enable him to perform his duties and not in the performance itself, arising from his need to increase his weight by reason of his underweight and his desire to increase it.
1. On 28 October 1999, the General Commissioners of Income Tax for Newport heard an appeal by Christopher David William Brown ("the respondent"), a professional rugby player and PE teacher, of Boddington Terrace, Careleon, Newport, Gwent, in respect of an amendment to the 1996-97 self-assessment tax return of the respondent underTaxes Management Act 1970 section 28As. 28A of theTaxes Management Act 1970 disallowing the following expenses:
(i) Expenses in travelling to and from training venues which he was required to attend as part of his duties as a professional rugby player in his employment by Caerphilly Rugby Football Club: £1,722;
(ii) Travel and subsistence costs on occasions when the respondent was unable to use the coach provided by his club to travel to away matches: travel £284; subsistence £110: total £394;
(iii) Additional food items (over and above those items which he would still require if he were in a sedentary occupation) and which he bought to maintain the physical bulk required of a flank forward in first class rugby: £474;
(iv) Dietary supplements: £173.
2. The question for the commissioners' decision was:
(i) In the first category (i) above, was the expenditure incurred in the performance of those duties, or before those duties commenced, or after they ceased?
(ii) In the second category (ii) above, was the expenditure incurred because of the respondent's employment as a rugby player or because of circumstances personal to the respondent?
(iii) In the third category (iii) above, was any part of the expenditure incurred wholly, exclusively and necessarily in the performance of the respondent's duties as a professional rugby player?
(iv) In the fourth category (iv) above, was the expenditure incurred wholly, exclusively and necessarily in the performance of the respondent's duties as a professional rugby player or was it incurred for dual purposes?
3. The appellant was represented by Mr RG Richards (HMIT) and the respondent was represented by Mr C Davies, an accountant. Evidence was given before the commissioners by the respondent.
4. [The documents proved or admitted before the commissioners were listed.]
5.1. As a result of the evidence both oral and documentary adduced before the commissioners they found the following facts proved or admitted.
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(i) At all material times the respondent engaged in two employments:
(a) as a physical education teacher at Liswerry High School, Newport, and
(b) as a professional rugby player by Caerphilly Rugby Football Club.
(ii) The Revenue amendment refers to the latter employment. Item 10.6 of the respondent's contract of employment with Caerphilly RFC required him "to maintain at all times the highest standard of physical fitness to meet, at the very least, the fitness standards set by the club".
(iii) In the first category the amendment refers to a 43-week period from 3 June 1996 to 5 April 1997 when the respondent was under contract to Caerphilly RFC. During this period his training pattern was as follows:
(iv) (a) During the playing season of 30 weeks
2 days per week at Caerphilly RFC ground
3 days per week at other venues.
(v) (b) During the off season of 13 weeks
University of Wales Institute at Cyncoed, Cardiff - 93 visits
Empire Pool, Cardiff - 23 visits
Merthyr Mawr - 16 visits
Leckwith, Cardiff - 14 visits
Welsh Institute of Sport, Cardiff - 10 visits
Lliswerry High School - 9 visits
Step Power, Newport - 3 visits
(vi) When at each of those venues the respondent was performing his duties as an employee of the Caerphilly RFC. His claims for various fees charged by those venues had been allowed by the Revenue in full.
(vii) The visits to those venues were necessitated by the inadequate facilities of the Virginia Park ground, headquarters of Caerphilly RFC, which was the respondent's place of employment, and the necessity, which could not be met at that venue, of undergoing specialist training, for example at Merthyr Mawr which specialises in endurance and Leckwith where they concentrated on track work.
(viii) The commissioners found that the respondent was an employee whose regular work routine involved him in working in a number of different places but following a fairly regular pattern. He was therefore travelling to his work and not on his work.
(ix) The commissioners found that the nature of the travel in those instances was commuting and was not done "in the performance" of the respondent's duties.
(x) The commissioners accepted the appellant's contention that the respondent was not an employee who had been sent temporarily to work somewhere other than the normal place of work.
5.2.1. In the second category the respondent claimed in respect of away matches, the cost of meals after the match, and the cost of travel to an away match.
5.2.2. Typically the players ate little before a match, but the host club would provide a meal after a match. The respondent often found these inadequate and would buy another meal "to finish the meal". Sometimes the host club did not provide a meal.
5.2.3. Typically the Caerphilly RFC provided a coach to take the players to an away match. Sometimes the respondent for domestic reasons or reasons connected with his other employment as a teacher was unable to use the coach and so travelled to an away match in his own vehicle. He claimed for the expense of so doing.
5.2.4. It was accepted that the respondent was performing the duties of his employment when he played at the away matches, but that the location of the...
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