HMRC v Tim Healy
| Jurisdiction | UK Non-devolved |
| Judgment Date | 25 July 2013 |
| Neutral Citation | [2013] UKUT 0337 (TCC) |
| Appellant | REVENUE & CUSTOMS |
| Respondent | TIM HEALY |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/51/2012 |
[2013] UKUT 0337 (TCC)
Appeal number: FTC/51/2012
Income Tax – deductions for rent payable under tenancy agreement for a
nine month period whilst actor appeared in stage production - were these
wholly and exclusively incurred for the purposes of his profession –
incorrect test applied by First-tier Tribunal – case remitted
IN THE UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE & CUSTOMS Appellant
- and -
TIM HEALY Respondent
TRIBUNAL:
JUDGE TIMOTHY HERRINGTON
JUDGE JOHN CLARK
Sitting in public in London on 25 and 26 April 2013
Oliver Conolly, Counsel, instructed by the General Counsel of Solicitor to HM
Revenue and Customs, for the Appellant, the Commissioners of Her Majesty’s
Revenue and Customs (“HMRC”)
Dennis Wren, Tax Manager, Bowker Orford, Chartered Accountants for the
Respondent, Tim Healy (“Mr Healy”)
© CROWN COPYRIGHT 2013
DECISION
Introduction
1. This is HMRC’s appeal from a decision of the First-tier Tribunal (Tax
Chamber) (the “FTT”) allowing Mr Healy’s appeal against a decision of HMRC made 5 following an enquiry into Mr Healy’s self assessment of tax for the year 2005 – 06
(“the Decision”).
2. Specifically, HMRC’s decision was that Mr Healy was not entitled under
section 34(1)(a) of the Income Tax (Trading and Other Income) Act 2005 (“ITTOIA”)
to deduct certain expenses relating to accommodation in the sum of £32,503 which 10 had been included in his self assessment. The appeal before the FTT also related to
certain expenses for subsistence and taxi fares. Mr Healy’s appeal was dismissed in
relation to those expenses and he did not pursue those claims any further.
3. Mr Healy contends, as was found by the FTT, that the accommodation
expenses, representing the rent payable under a tenancy agreement for a period of 15 nine months whilst Mr Healy was appearing in stage production in London, were
incurred wholly and exclusively by Mr Healy for the purposes of his profession.
4. HMRC contend that the FTT erred in law in failing to consider, or consider
properly, whether Mr Healy had a dual purpose in incurring the expenditure in
question, namely to meet his ordinary needs for warmth and shelter as well as his 20 stated business purpose. They contend that had the FTT applied the correct test
plainly it would have found that such needs were included amongst the purposes of
the expenditure and accordingly the appeal should be simply allowed rather than
remitted to the FTT to be decided again.
Adjournment application 25
5. The parties were notified on 17 September 2012 that this appeal had been listed
for hearing on 25 and 26 April 2013. HMRC then attempted to agree case
management directions with Mr Healy’s representatives, Bowker Orford, but received
no response as a result of which HMRC submitted draft directions which the Upper
Tribunal approved on 30 January 2013 (the “Directions”). Among other things, the 30 Directions provided for skeleton arguments to be filed, HMRC to file by 11 April
2013 and Mr Healy no later than one week later.
6. Bowker Orford continued to ignore communications sent by HMRC regarding
compliance with the Directions, and in particular the provision by Bowker Orford of
Mr Healy’s list of documents. Consequently, after enquiries from the Tribunal, 35 Bowker Orford stated in an email dated 6 March 2013 that they were still awaiting to
hear from Mr Healy with his instructions as he had a concern that if HMRC were
successful on the appeal he would potentially be liable for their costs, HMRC having
declined to indicate that they would not seek to recover their costs if successful under
the Rees Principle. It would appear that on 27 March 2013 HMRC provided Bowker 40
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