THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS v JAYANTH KUNJUR [2023] UKUT 00154 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mrs Justice Bacon,Judge Jonathan Cannan |
| Subject Matter | 10 July 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 10 July 2023 |
UT Neutral citation number: [2023] UKUT 00154 (TCC)
Case Number: UT/2022/000047
UPPER TRIBUNAL
(Tax and Chancery Chamber)
Hearing venue: Rolls Building
Fetter Lane
London
EC4A 1NL
Heard on: 16 May 2023
Judgment date: 10 July 2023
INCOME TAX – employment income – section 336 ITEPA 2003 – deduction for rent of premises by doctor – whether obliged to incur the expenses as holder of the employment – whether wholly, exclusively and necessarily in the performance of the duties of the employment – appeal allowed
Before
MRS JUSTICE BACON
JUDGE JONATHAN CANNAN
Between
THE COMMISSIONERS FOR HIS MAJESTY’S
REVENUE AND CUSTOMS
Appellants
and
JAYANTH KUNJUR
Respondent
Representation:
For the Appellants: Marianne Tutin, counsel, instructed by the General Counsel and Solicitor for His Majesty’s Revenue and Customs
The Respondent did not appear and was not represented
DECISION
-
This is an appeal by HM Revenue & Customs (“HMRC”) against a decision of the First-tier Tribunal (Tax Chamber) (“the FTT”) released on 7 October 2021 (“the Decision”). The FTT allowed an appeal in part by Mr Jayanth Kunjur (“Mr Kunjur”) against various assessments and a closure notice charging income tax for the tax years 2012–13 to 2016–17 (“the Assessments”). The FTT also allowed an appeal in part against various penalty assessments for those years. HMRC challenges the decision of the FTT to allow the appeals against the Assessments. It does not challenge the decision of the FTT in relation to the penalties.
-
During the tax years in question, Mr Kunjur was a junior doctor working at St George’s Hospital, Tooting. Throughout those tax years his family home was in Southampton, where he lived with his wife and children. This appeal concerns expenditure which Mr Kunjur incurred on living accommodation which he rented in Colliers Wood, near to the hospital (“the Premises”). Mr Kunjur claimed relief for that expenditure in his tax returns for the relevant tax years. The FTT held that he was entitled to relief for a proportion of the expenditure by reference to the amount of time it considered that he spent at the Premises performing some of the duties of his employment.
-
The relevant provision providing relief from income tax is s. 336(1) of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”):
“(1) The general rule is that a deduction from earnings is allowed for an amount if —
(a) the employee is obliged to incur and pay it as holder of the employment, and
(b) the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.”
-
Shortly before the hearing of this appeal, Mr Kunjur withdrew his case on the appeal pursuant to Rule 17 of the Tribunal Procedure (Upper Tribunal) Rules 2008. He did so because he was concerned about his potential liability to costs if HMRC were to succeed. In the light of his withdrawal, HMRC has stated that it will not seek costs against Mr Kunjur in the event that its appeal succeeds.
-
The facts found by the FTT are at §2 of the Decision. The relevant facts may be summarised as follows:
-
Mr Kunjur was a practising dental surgeon and wanted to qualify as a maxillofacial surgeon. He accepted a position at St George’s Hospital and the period of his training was from 2012 to 2016.
-
Mr Kunjur’s family was established in Southampton and it was not possible for him to move his family to London.
-
Mr Kunjur’s contractual duties required him to be on-call two nights each week (not necessarily the same two nights) and one weekend in six in addition to his daily duties. When on-call, he would cover patients in all wards of the hospital and not just the maxillofacial patients. The FTT described these as his “formal on-call duties”. In addition, if any maxillofacial patient required assistance during the night, it was normal for Mr Kunjur to be called for advice. The FTT referred to this as the “informal on-call duties”. Mr Kunjur received calls on most nights and regarded himself as permanently on-call.
-
Mr Kunjur had to have accommodation within 30 minutes’ travelling time from the hospital to discharge the formal on-call duties. He also had to have appropriate and reliable telephone connections to be able to discharge all the on-call duties.
-
Mr Kunjur had certain obligations as a doctor. The General Medical Council required doctors to “make the care of your patient your first concern”. He put the interests of his patients before those of his family and therefore rented the Premises. He stayed at the Premises during the week and one weekend in six to discharge his formal on-call duties. He drove home to Southampton each Friday and would return to Colliers Wood the following Sunday to begin work on Monday.
-
Mr Kunjur did not regard Colliers Wood as an attractive place to live. He never invited his family to visit him in London.
-
The FTT considered that it would have been unreasonable to expect Mr Kunjur, a mature dental surgeon of 17 years’ experience, to use residential accommodation available in the hospital which was used by undergraduates, or to find hotel accommodation. In particular, it did not consider that such accommodation would provide the “peace, quiet and stability that were necessary for Mr Kunjur to discharge his duties as a trainee maxillofacial surgeon”. The Premises were modest but provided Mr Kunjur with an appropriate place to sleep and study.
-
-
The FTT addressed the following issues in the Decision:
-
Whether Mr Kunjur was obliged to incur the expenses of renting the Premises as the holder of an office or an employment.
-
Whether those expenses were incurred wholly, exclusively and necessarily in the performance of the duties of the office or employment.
-
-
The FTT dealt with the second issue as two separate issues: (a) what the FTT described as the “wholly and exclusively test”; and (b) what the FTT described as the “in the performance of the duties test”. The FTT’s reasoning appears in the Decision under the following headings.
-
The FTT firstly considered at §§14–17 whether Mr Kunjur was obliged to incur the expenses as the holder of an office or an employment. The reference to an office does not appear in s. 336, but it appears in previous versions of the provision and is referred to in some of the authorities. Section 5 ITEPA 2003 provides that provisions in that Act expressed to apply to employments apply equally to offices.
-
The FTT considered that “the test” in this regard was objective in relation to the holder of an office. It went on to suggest that the test in relation to employees “may be subjective”, but in any event held that the objective test was satisfied. It stated at §14 that Mr Kunjur was subject to the professional obligation to place the interests of his patients above his own, and this was an obligation imposed on Mr Kunjur as an employee of St George’s Hospital. The FTT continued:
“15. Mr Kunjur’s formal on-call duties required him to be able to treat patients within 30 minutes of being called which duty meant Mr Kunjur could not perform them from Southampton and as it was not reasonable to expect Mr Kunjur to use the undergraduate accommodation or to uproot his family for the duration of the relatively short-term training contract, it was necessary for Mr Kunjur to rent accommodation in London.
16. Mr Kunjur was obliged to live close to the St George’s hospital to be able to perform his formal on-call duties. We accept Mr Kunjur’s explanation that in cases of traumatic head injury which was his specialism, it is imperative to treat patients very quickly and the rule of thumb used by doctors is that they should be able to get to the hospital and be ready to treat the patients within 30 minutes of being called. The accommodation in Collier’s Wood was within a 30-minute journey of the St George’s hospital.
17. Mr Kunjur was obliged to incur the expenditure on accommodation in Colliers Wood, as the holder of an employment.”
Wholly and exclusively test-
The FTT described this test as follows:
“18. The wholly and...
To continue reading
Request your trial