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HMRC internal manual

Business Income Manual

Wholly and exclusively: duality of, or non-trade, purpose: travel costs: overseas conference

S34 Income Tax (Trading and Other Income) Act 2005, S54 Corporation Tax Act 2009

Allowable if no non-trade purpose

Where the sole purpose of travel is wholly and exclusively for the purposes of the trade, profession or vocation then the cost will be allowable notwithstanding some incidental private benefit (see BIM37400). It is important to bring out before the tribunal the evidence in support of any contrary arguments (see BIM37065). Failure so to do restricts what may subsequently be argued in the courts (see below).

In the case of Edwards v Warmsley Henshall & Co [1967] 44 TC 431, a deduction was allowed for the costs incurred by a partner, Mr Evans, in a firm of chartered accountants practising in Chester in attending the Eighth International Congress of accountants in New York.

There was no evidence before the Commissioners to show that Mr Evans also intended to have a holiday whilst in New York. The flight arrangements allowed extra days beyond the conference but this is because a charter flight was chosen (at a significant cost saving over scheduled flight) and this determined the duration of stay in America. Mr Evans made no claim for the expenses that he incurred on the non-conference days.

The Crown argued that the remoteness of the subjects discussed did not warrant such a small firm sending a partner. In court, the Crown sought to argue that there was duality of purpose in that Mr Evans attended the conference both as a partner in Warmsley Henshall and to further accountancy in general. On the evidence before them, the Commissioners were entitled to come to allow the deduction. Cross J declined to remit the case to the Commissioners and dismissed the Crown’s arguments.

The Revenue had failed to bring out any evidence before the Commissioners on the duality argument and so was effectively prevented from progressing any such argument in the High Court, as shown by Cross J’s words on page 439:

‘The Crown, as I see it, must take the consequences of not having raised before the Commissioners the question of “duality” of purpose as between the interests of the firm and the interests of the profession. They allowed the Commissioners to proceed on the footing that, if they rejected the contention that Mr. Evans had other reasons for going to America beyond that of attending the congress, the only question for them to ask themselves was whether the nature of the congress was such that the partners could not reasonably think that the profit-earning capacity of the firm would be furthered by Mr. Evans’s attendance at it.’

For another case involving overseas travel where the deduction for the expenses was denied, see BIM37610.