News – 02.12.24
2024 US tax year end planning for Americans in the UK
The 2023 US tax year ends on 31 December 2023, so now is a good time to consider whether there is anything that you can do to minimise your US tax exposure for 2023 and begin preparing for 2024. … Read more
Insight – 02.12.24
Budget 2024: Reform to the taxation of carried interest
Find out more about the changes coming for capital gains tax and carried interest. … Read more
Upcoming event – 10.12.24
Funding innovation in the technology sector: Are the government doing enough?
Join us for an exclusive roundtable breakfast to explore the question of whether the government are doing enough to support innovation in the technology sector. … Read more
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Ms Daniels was a self-employed ‘exotic dancer’ at Stringfellows, a gentlemen’s nightclub in Central London. She claimed tax relief on a number of business expenses on her 2014 tax return, which HMRC challenged under enquiry.
An agreement was reached between HMRC and Ms Daniel’s accountant that led to the disallowance of all travel costs (by virtue of the Upper Tribunal decision in Dr Samad Samadian v HMRC [2014] UKUT 0013 (TCC)) and 80% of the other costs. A closure notice was issued for the enquiry year, together with discovery assessments for the earlier tax years. Ms Daniels was not aware of her accountant’s agreement and appealed. HMRC and Ms Daniels were unable to settle the dispute by agreement, although two of the earlier discovery assessment years were dropped.
HMRC also raised penalties alleging Ms Daniels had been careless, which she appealed. HMRC later suggested suspending those penalties.
The FTT found that the expenditure claimed by Ms Daniels was akin to the acquisition of a costume by a self-employed actor for use in a performance and as such, in accordance with HMRC’s established practice, it was expenditure wholly and exclusively incurred for the purpose of her professional performances and was, therefore, deductible. The judge held that there was no duality of purpose and that Ms Daniels clothes were not required for ‘warmth and decency’ or worn outside work.
The judge said in his ruling that HMRC had been ‘heavy handed’ in its approach and recommended that Ms Daniels should keep proper records in respect of any future self-employment she may undertake.
By pursuing her claim, Ms Daniels saved not only the tax on the cost of her outfits, but also penalties and interest.
Barbara Bento, Senior Manager of Buzzacott’s Tax Investigations & Dispute Resolutions team said of the case “Two important points were highlighted in this decision. Firstly, where a trade or profession is not itinerant, travel costs claimed from home to a place of business, particularly one that is regularly attended, will be robustly challenged by HMRC. Secondly, HMRC’s view on what qualifies for tax relief in respect of clothing acquired for business purposes is too strict. Each case should be judged on its own facts and merits.”
Ms Daniels was a self-employed ‘exotic dancer’ at Stringfellows, a gentlemen’s nightclub in Central London. She claimed tax relief on a number of business expenses on her 2014 tax return, which HMRC challenged under enquiry.
An agreement was reached between HMRC and Ms Daniel’s accountant that led to the disallowance of all travel costs (by virtue of the Upper Tribunal decision in Dr Samad Samadian v HMRC [2014] UKUT 0013 (TCC)) and 80% of the other costs. A closure notice was issued for the enquiry year, together with discovery assessments for the earlier tax years. Ms Daniels was not aware of her accountant’s agreement and appealed. HMRC and Ms Daniels were unable to settle the dispute by agreement, although two of the earlier discovery assessment years were dropped.
HMRC also raised penalties alleging Ms Daniels had been careless, which she appealed. HMRC later suggested suspending those penalties.
The FTT found that the expenditure claimed by Ms Daniels was akin to the acquisition of a costume by a self-employed actor for use in a performance and as such, in accordance with HMRC’s established practice, it was expenditure wholly and exclusively incurred for the purpose of her professional performances and was, therefore, deductible. The judge held that there was no duality of purpose and that Ms Daniels clothes were not required for ‘warmth and decency’ or worn outside work.
The judge said in his ruling that HMRC had been ‘heavy handed’ in its approach and recommended that Ms Daniels should keep proper records in respect of any future self-employment she may undertake.
By pursuing her claim, Ms Daniels saved not only the tax on the cost of her outfits, but also penalties and interest.
Barbara Bento, Senior Manager of Buzzacott’s Tax Investigations & Dispute Resolutions team said of the case “Two important points were highlighted in this decision. Firstly, where a trade or profession is not itinerant, travel costs claimed from home to a place of business, particularly one that is regularly attended, will be robustly challenged by HMRC. Secondly, HMRC’s view on what qualifies for tax relief in respect of clothing acquired for business purposes is too strict. Each case should be judged on its own facts and merits.”
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