P Duckmanton v HMRC

In P Duckmanton v HMRC (TC01506 – 10 November) a sole trader (D) operated a vehicle transport business. In 2002 one of his lorries killed a pedestrian. D was charged with manslaughter and attempting to pervert the course of justice. He was subsequently convicted of attempting to pervert the course of justice but was acquitted of manslaughter. In his returns he claimed a deduction for the legal costs of defending himself. HMRC issued amendments disallowing the deductions and D appealed. The First-tier Tribunal dismissed his appeal holding that the expenses were not wholly and exclusively incurred for the purposes of D’s trade. Judge Connell held that ‘if the sole purpose of the taxpayer in incurring expenditure is business preservation the expenditure should not be disallowed simply because the purpose of the expenditure necessarily involved some other result. If however as...