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Duality of purpose

The Upper Tribunal has recently considered HMRC’s appeal in the case of Healy v HMRC [2013] UKUT 0337 where the First-tier Tribunal allowed Mr Healy a deduction from his professional income as an actor for the costs of renting a flat close to the theatre where he was in a long running production.

The problem can be expressed comparatively simply. If he had stayed in a hotel close to the theatre the expenditure would have been deductible so why should the (no doubt cheaper) cost of renting a flat for exactly the same purpose not be tax-deductible?

Unfortunately the analysis is not so easy. We all learnt at our mother’s knee that to be deductible the expenditure must be laid out wholly and exclusively for the purposes of trade. If...

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