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HMRC internal manual

Employment Income Manual

The general rule for employees: expenses: dealing with expenses: always give an explanation if you refuse to permit a deduction for an expense

Many requests for a deduction are made by letter or by using form P87 by employees who have not received a Self Assessment tax return, see EIM31700. Most of these cases can be settled by agreement without using the formal machinery for assessment and appeal.

If a deduction is not due it’s usually enough to explain to the employee in a letter, by telephone or at a meeting that a deduction cannot be given. But you must always give a reasoned and complete explanation why this is so. Simply saying that a deduction is not allowable will not satisfy the employee and is likely to lead to further correspondence.

Frequently the employee will be convinced that the expenditure that he or she has incurred is both reasonable and necessary. You’ll need to explain carefully why that is not enough to permit a deduction.