Watkis v Ashford Sparkes & Harward [1985] 58 TC 468
Citation:Watkis v Ashford Sparkes & Harward [1985] 58 TC 468
Rule of thumb:Are food & drink and accommodation when working away from home on an overnight stay deductible tax expenses? Yes, this is an exception where these expenses are tax deductible.
Judgment:
The Court held that when there has been an overnight stay for business, the cost of this as well as the food and drink at night are deductible as expenses. The Court held that food and drink during partnership meeting were not deductible expenses., `Many people enjoy their work. Many people do not enjoy social occasions, particularly when they are in some way connected with work. But many occasions which are social in form, whether they are enjoyed or not, are very successful in furthering business interests... The real question was whether the Commissioner was entitled to find that the business purpose in incurring the expenditure was not just the predominant purpose but in truth the exclusive purpose, so that any private benefit to the taxpayers was purely incidental. …The food and drink at the lunch-time and evening meetings and at the Kitopenel conference was provided at times when the partners would normally have eaten lunch or dinner anyway. There was no evidence and no finding that if the meetings had not been held they would not have lunched or dined elsewhere, and I do not think that he could make any inference to that effect. …The lunches and dinners took the place of meals that would have been consumed in any event, and even if that was not so the result would be the same. Just as Miss Mallalieu needed to wear clothes not only when she was in court but also when she was not, so did the taxpayers need food and drink irrespective of whether they were engaged on a business activity or not... `I do not think that the cost of the accommodation can necessarily be said to have been expenditure which met the needs of the taxpayers as human beings. They did not need it for that purpose because they all had their own homes where they could have spent the night. The reason why they needed it was so that they could continue their discussion informally between the formal sessions on the Saturday afternoon and the Sunday morning. …The Commissioner was entitled, on the facts found, to conclude that the business purpose in incurring the cost of the accommodation was the exclusive purpose and that the private benefit to the taxpayers was purely incidental’. Nourse J
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