In G Bowman (t/a the Janitor Cleaning Co) v HMRC (TC02284 – 9 October) a trader (B) operated a cleaning business. He claimed a deduction for £11 000 described as a consultancy fee which he had paid to an American who had helped him win a major contract. HMRC rejected the claim on the grounds that the payment was capital expenditure. The First-tier Tribunal dismissed B’s appeal. Judge Tildesley observed that the projected turnover under the contract exceeded B’s current annual turnover and was intended to secure ‘an enduring benefit for the appellant’s business’.
Why it matters: The First-tier Tribunal upheld HMRC’s view that in view of the size of the projected contract the payment here was capital expenditure rather than revenue expenditure.
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