Stones v Revenue & Customs [2012] UKFTT 110 (TC) (08 February 2012)

Stones v Revenue & Customs [2012] UKFTT 110 (TC) (08 February 2012)

The Tribunal found that, as a matter of law, wardrobe and subsistence costs were not allowable under the 'wholly and exclusively' test. However, for the 2006/07 tax year, the appellant was entitled to rely on specific misdirection by HMRC officers regarding these expenses, and her claims under these headings should be allowed for that year. For subsequent years, once HMRC clarified the correct position, the appellant could not continue to rely on the earlier advice.

Citation
[2012] UKFTT 110 (TC)
Parties
Appellant: Louise Stones; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
08 February 2012
Procedural Posture
Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Self Assessment, Business Expenses, Wholly and Exclusively Test, Misdirection by HMRC, Legitimate Expectation
Tax Law Income Tax Self Assessment Business Expenses Wholly and Exclusively Test Misdirection by HMRC Legitimate Expectation

Case Brief

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Parties

Louise Stones

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether certain business expenses claimed by the appellant were incurred wholly and exclusively for the purposes of her trade under s.34 ITTOIA 2005
  2. 2 Whether the appellant was misdirected by HMRC officers regarding allowable expenses and could rely on that advice

Ratio Decidendi

The Tribunal found that, as a matter of law, wardrobe and subsistence costs were not allowable under the 'wholly and exclusively' test. However, for the 2006/07 tax year, the appellant was entitled to rely on specific misdirection by HMRC officers regarding these expenses, and her claims under these headings should be allowed for that year. For subsequent years, once HMRC clarified the correct position, the appellant could not continue to rely on the earlier advice.

Court Disposition

Appeal allowed in part

Orders

  • For 2006/07, the appellant is entitled to additional allowable expenditure of £389 and to rely on HMRC's misdirection regarding wardrobe and subsistence costs; HMRC to amend the review decision accordingly.
  • For 2007/08 and 2008/09, the amendments to the self-assessment returns are confirmed, subject to any adjustment arising from the £389 referred to above.