Law: Income and Corporation Taxes Act, 1970

Section: 130(a)

Income-tax---Expenses of trade or profession (Schedule D)--Partnership---Computation of profits--Removal expenses incurred by partners moving to work at another partnership office---Reimbursement by partnership---Whether expenditure incurred wholly and exclusively for purposes of partnership's business---Whether deductible in computing taxable profits---Income and Corporation Taxes Act, 1970 (C.10), S.130(a)(English). The tax-payers were the partners of a large firm of chartered accountants that operated from offices throughout England, Wales and Scotland. The partners agreed to a policy whereby certain speed domestic removal expenses incurred by partners or by employees who were required to move to work in an office in a different part of the country would be reimbursed to them. During the fiscal year 1981-82 two partners were so required to move and their removal expenses that totalled £ 8,568 were paid by the partnership. A Tax Inspector refused to allow a claim that the expenditure was deductible in ascertaining the profits of the partnership as being money laid out wholly and exclusively for the purposes of the business. The partnership's appeal to the special Commissioners against that refusal was upheld. The Commissioners rejected the Crown's case that such expenditure if incurred by a sole practitioner in moving his home for business purposes would not be deductible since it would be for a dual purpose - partly professional and partly domestic and that there was no difference in principle between a sole practitioner and a partner. On appeal by the Crown, Vinelott, J. upheld that submission and reversed the Commissioners' determination. On appeal by the partnership:-- Held, allowing the appeal, that for the purposes of ascertaining its liability to income-tax on its profits a partnership was to be treated as an entity separate from its individual partners; that expenditure incurred by a partnership might be deductible in ascertaining its profits even though the recipient was one of the partners providing that such expenditure was not made to him in return for services rendered by him as a partner; that the collective purpose of the partnership in…

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