Mrs P Azam v HMRC

In Mrs P Azam v HMRC (TC00895 – 17 January) the proprietor of a beauty salon claimed a deduction for counselling expenses. HMRC rejected the claim and she appealed contending that she had undertaken the counselling in order to help her deal with ‘issues such as those where she needed to confront her staff’. The First-Tier Tribunal dismissed her appeal finding that she had incurred the expenditure with a dual purpose part of which ‘was to enhance her own wellbeing’. Accordingly the expenditure was not exclusively for the purposes of her business.

Why it matters: ITTOIA 2005 s 34 provides that expenditure is only deductible if it is wholly and exclusively for the purpose of the business. The First-Tier Tribunal upheld HMRC’s view that the payment here had been partly incurred for personal purposes and was not an allowable deduction.