Always a question that I get asked. Clothing is easy, subsistence is not so easy.
Whenever you think about whether you claim for this or that as a business expense think about how the HMRC will view it. Their mantra is “wholly and exclusively” and they will also want to consider the “duality “of an expense. Let me explain.
Firstly is an expense ‘wholly and exclusively’ for the purposes of the business i.e. would the expense have occurred if you were going about your non business life? Of course there are a number of expenditures where you might incur an expense attributed to a non business activity but consider some of that expense actually ‘business’ use.
So secondly how is the item or expenditure to be used in your non business life i.e. does it serve an intrinsically dual purpose or can you define business and non business use? If you choose to buy it and you can you use it in ‘whole’ for your non business life then you can’t claim for it. If there is no method to say this bit is for business and this bit is for non business, it becomes all non business.
A good example of this is the case of Caillebotte v Quinn (1975), the carpenter and his lunch. The carpenter claimed for the additional cost of his lunch because he was at different sites during the course of his working day and was not able to eat at home. The court ruled that the carpenter ate his lunch to live and did not incur the expense of his lunch by virtue of being a carpenter working on building sites. As such he couldn’t apply a reduction to his tax liability. After all he could have taken a packed lunch.
So claiming for your lunch is out or is it?
Generally yes, but the HMRC does understand that some businesses mean that the sole trader may have to make journeys outside their normal pattern of work and therefore may incur subsistence costs on this basis. For example as a sole trader I travel to clients that require plane journeys to be taken. I claim for the subsistence costs that I incur through the airports as I have early and late flights that interfere with my normal routine. Costs that are *‘itinerant’ and costs incurred from overnight stays are deemed as fair – sounds about right to me.
This issue of ‘wholly and exclusively’ and dual purpose extends to the question of clothing. Basically you cannot claim for clothing that has duality of purpose, so jackets, suits or clothes that you may chose to meet a standard of dress but could be worn as part of an everyday wardrobe cannot be claimed. However you can claim for protective clothing and uniforms.
It’s not possible to say what part of a sandwich is for business and which is not and it’s not possible to say one arm of a jacket is for business and the other is not. These expenses are not ‘wholly and exclusive’ and they have ‘duality of purpose’.
But if you can show the expense has a relationship to the business and you can measure and evidence it then you can claim it. If in doubt ……..ask me.
HMRC References – BIM37910, BIM37900, BIM37670
*Itinerant – a person who travels from place to place
