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HMRC internal manual

Business Income Manual

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Wholly and exclusively: expenditure having an intrinsic duality of purpose: health

S34 Income Tax (Trading and Other Income) Act 2005

Treatment of work induced illness

Medical expenditure on ensuring or restoring good health is not generally allowable.

In the case of Norman v Golder [1944] 26TC293, a shorthand writer working in the courts had suffered from a severe illness and had incurred expenses - doctor’s bills, etc. Mr Norman stated that his illness was the direct result of working in unfavourable conditions. Mr Norman contended that the expenses should be deducted in computing the liability to tax in respect of his earnings as being expenditure wholly and exclusively incurred in connection with his professional work, and not domestic expenditure. Alternatively, Norman contended that the expenditure should be allowed as an allowance for wear and tear.

Mr Norman also contended that the onus was on the Crown to prove that the assessment was correct and not upon himself to show that it was incorrect. Furthermore the assessment was invalid because:

  1. the notice of assessment did not set out the statute under which the assessment was made nor the person who made it
  2. the Finance Act for the year of assessment was not competently passed
  3. the assessment had been made by an Inspector of Taxes and not by the appropriate Commissioners, and
  4. the notice of assessment was incorrect in detail

In addition, he questioned the validity of the stated case as it was signed by only one of the two Commissioners who heard his appeal, the other having died.

The court held that if the case were invalid no appeal to the courts was competent but as the appellant had proceeded with the appeal he could not now argue that the case was invalid. On the other technical points raised the courts dismissed the taxpayer’s contentions.

On the substantive point, the Master of the Rolls, Lord Greene, explained why no deduction was due. As the human body is not ‘plant’, Lord Greene dismissed Mr Norman’s argument that his own body was subject to wear and tear and that he was entitled to medical expenses required to maintain it. The judge went on:

`It is also impossible to argue that doctor’s bills represent money wholly and exclusively laid out for the purposes of the trade, profession, employment or vocation of the patient. True it is that if you do not get yourself well and so incur expenses to doctors you cannot carry on your trade or profession, and if you do not carry on your trade or profession you will not earn an income, and if you do not earn an income the Revenue will not get any tax. The same thing applies to the food you eat and the clothes that you wear. But expenses of that kind are not wholly and exclusively laid out for the purposes of the trade, profession or vocation. They are laid out in part for the advantage and benefit of the taxpayer as a living human being.’

There will almost always be a personal purpose in wishing to enjoy better health. Expenditure incurred for that purpose will therefore be of a dual nature and is not allowable. Different considerations may apply where expenditure is on purely cosmetic matters and where health considerations are not involved (see BIM37945).