Healy v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 30 March 2012 |
| Neutral Citation | [2012] UKFTT 246 (TC) |
| Date | 30 March 2012 |
| Court | First Tier Tribunal (Tax Chamber) |
[2012] UKFTT 246 (TC)
Judge Barbara J King
Nichola Ross Martin, of Francis Clark Tax consultancy appeared for the Appellant
Ros Oliver, HMRC advocate, appeared for the Respondents
Income tax - deductions for accommodation and travel and subsistence - were these wholly and exclusively incurred for the purposes of the profession of actor - was base of operation relevant - was expenditure on food incidental to accommodation in rented flat - taxis fares unsupported by evidence - appeal allowed in part
The First-tier Tribunal decided that a taxpayer actor's expenditure for accommodation during his engagement for a musical in London was wholly and exclusively for the purposes of his profession. He needed to find accommodation in London so that he had somewhere to stay near the theatre where the musical was being shown. However, the Tribunal held that his expenditures for subsistence and taxi fares were not wholly and exclusively for the purposes of his profession. He had failed to produce a breakdown or record of the meals eaten, as well as receipts for the taxi fare.
The taxpayer appealed against HMRC's decision finding that the expenses for accommodation, subsistence, and taxi fares he included in his self-assessment tax return for the year 2005-06 were not deductible in accordance with the Income Tax (Trading and Other Income) Act 2005 ("ITTOIA 2005"), Income Tax (Trading and Other Income) Act 2005 section 34 subsec-or-para 1s. 34(1)(a).
The taxpayer, a professional actor, lived for some time in Northumberland before he moved with his wife in Cheshire in 2001. In December 2004, he entered into a contract with a musical theatre producer to appear for a musical from 13 December 2004 to 17 September 2005; this was extendible up to 13 December 2005. The rehearsals for the musical were in London. He stayed rent-free in a friend's apartment in London from 13 December 2004 to 24 March 2005. From 15 April 2005 until 13 April 2006, he rented a flat which was just one mile from the theatre.
In his self-assessment tax return, the taxpayer claimed as deductible expenses those he incurred for accommodation relating to payments he made for the flat, subsistence coming from eating out in restaurants, and taxi fares for the duration of the musical. HMRC disallowed these expenses and the taxpayer appealed.
The taxpayer argued that he was an itinerant worker throughout the period he had been in London in connection with the production of the musical. Thus, he said he should be allowed the reasonable travelling and subsistence expenses incidental to the accommodation costs per HMRC tax manuals. He submitted that he worked in a variety of venues in London and that he had to rent a flat as he could not have gone home to Cheshire after his nightly performances.
HMRC did not accept that the taxpayer was an itinerant worker throughout the period of his involvement with the musical. They said that the taxpayer moved to London as his base in that period and that he had not shown that the expenditure on accommodation, taxis, and subsistence was wholly and exclusively incurred for the purposes of his profession.
Whether the taxpayer's expenditures for accommodation, subsistence, and taxi fares were wholly and exclusively for the purposes of his profession and, thus, deductible from his income tax.
Held, allowing the taxpayer's appeal in part:
1.The Tribunal held that the taxpayer's expenditure on accommodation was made wholly and exclusively for the purposes of his profession and was deductible from his profits under ITTOIA 2005, Income Tax (Trading and Other Income) Act 2005 section 34 subsec-or-para 1s. 34(1)(a). The Tribunal found on balance that the taxpayer's need to find accommodation in London so that he had somewhere to stay near the theatre where the musical was being shown, was wholly and exclusively in connection with his profession as an actor. The contract which he entered into for his appearance in the musical was a standard contract for West End theatres. This provided for termination on two weeks' notice if the production was due to close. There was no element of long term stability for the taxpayer. He did not consider moving to London. He agreed to appear in the production and found it necessary to find accommodation in London for as long as he was appearing in the production. In all probability, an actor appearing in a West End production may need to be around for promotional activities connected with the production and for the development of his or her own career.
2.As to the expenditures for subsistence and taxi fares, the Tribunal found them not wholly and exclusively for the purposes of the taxpayer's profession. The Tribunal did not find the expenditure on subsistence in his flat as incidental to its rent. There was neither breakdown of how many meals in restaurants were included in his claim, nor record of these meals eaten and whether any of these meals involved other members of the cast or of the production team.
3.The taxpayer also failed to produce receipts for taxi fares and there was no evidence that he did make this journey by taxi to and from the theatre on each of the days when he was involved in a performance, when he travelled to Cheshire, or when he did voice over work in London or Manchester. Moreover, his bank statements showed that he made several...
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