What can you claim as an expense? Pontoon owner wins appeal

 In HMRC Investigation

Nice pontoon, but is it a legitimate expense?

The first-tier tribunal has allowed an appeal in part for an author to claim expenses relating to relocating his boat to southern France against his self-employment income.

The case of C Huhtala v HMRC [TC 1775] involved a freelance journalist and author who decided to write a book entitled ‘A Year on a Pontoon’ about living on a boat.

Huhtala claimed a deduction for expenses of £10,000 from mooring and moving his boat to Port Grimaud and living there for a year.

HMRC rejected his claim on the basis that the expenditure had not been “wholly and exclusively incurred” for the purpose of his profession as an author, but was partly incurred for personal reasons.

The FTT initially dismissed his appeal finding that “the expenses incurred had a duality of purpose”.

After appealing to the upper tribunal, it remitted the case for rehearing, and the FTT allowed the appeal in part.

The tribunal did not allow him relief for everything, but he did get the cost of transporting the boat to France, the crane for putting it in the water and the purchase of maritime charts.

Expenditure on repairs, improvements, mooring fees and insurance was not allowable, since the evidence indicated that the author would have owned a boat even if he had not written the book.

Speaking at the PTP Quarterly Tax Update in Bristol last week, Mark Ward said how difficult it can be to get HMRC to agree to a deduction for expenses, but highlighted the case as to what can be done.

Ward said: “Writers must get a deduction for some things like travel and subsistence, but at what point do you start trading as an author – when the book is bound and ready for sale?”

From the good people at AccountingWeb.

See also, You get the expenses they allow / you negotiate.

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