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In a surprising but sensible decision from the first-tier tribunal, actor Tim Healy was able to claim £32,503 for accommodation. He had also attempted to claim subsistence of £4,094 and taxi fares of £4,080. The expenditure was claimed in his tax return for 2005-06.

Mr Healy is a well-known actor, renowned for his Geordie accent. He did not attend the hearing, but his father-in-law gave evidence on his behalf. Mr Healy and his wife own a house in Cheshire, where they have lived since 2001.

In December 2004, Mr Healy entered into a contract to appear in Billy Elliot, The Musical from 13 December 2004 to 17 September 2005. There was a provision that the contract could be terminated at two weeks’ notice if the production did not continue until 17 September 2005. The production was very successful and Mr Healy extended his contract until 13 December 2005.

Initially, Mr Healy had stayed with a friend, but then entered into a tenancy agreement for a fixed term of 52 weeks. While in London, Mr Healy also undertook other work. His address for correspondence remained in Cheshire, where his wife and family remained.

He could not have gone home every night after the evening performances and could have stayed in a hotel, but found it cheaper to rent a flat and there were also fewer security problems.

HMRC did not agree.

The statutory provisions governing whether a self-employed person may deduct expenses are contained in section 34 of ITTOIA 2005:

Expenses not wholly and exclusively for trade and unconnected losses:

In calculating the profits of a trade, no deduction is allowed for
(a) expenses not incurred wholly and exclusively for the purposes of trade, or
(b) losses not connected with or arising out of the trade.

If an expense is incurred for more than one purpose, this section does not prohibit a deduction for any identifiable part or identifiable proportion of the expense which is incurred wholly and exclusively for the purposes of the trade.

There is no absolute rule that food and drink can never be allowed. In Watkis v Ashford Sparkes and Harward [1985] 58 TC 468 food, drink and accommodation at an annual conference was allowed and any private benefit to the taxpayer was deemed purely incidental.

The tribunal found that Mr Healy was well known and had worked in many places during his career and London had not predominated. His home and base were in Cheshire. He needed to stay in London and had done so wholly and exclusively for the purpose of his profession; he was not seeking a home in London. There was no duality of purpose.

Had he stayed in a hotel, it would have been necessary to eat and there would be a record of the expenditure. Reasonable expenditure on subsistence in a hotel may well have been found to be subsistence. Mr Healy rented a flat, but there could be no subsistence expenditure incidental to renting the flat. The flat was just over a mile from the theatre and no evidence was given as to when the expenditure on taxi fares was incurred. Some fares were claimed in respect of trips to Cheshire but there was no evidence as to where voice-over work was recorded.

Mr Healy failed to persuade the tribunal that the subsistence and taxi fares were incurred wholly and exclusively for the purposes of his profession.

His appeal was therefore allowed in part. Further details are available.

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