A special commissioner decided that a taxpayer was not entitled to a deduction in respect of the cost of examination re-sit fees, either as vocational training relief or as an ordinary trading deduction.

Facts

The taxpayer traded as a tutor in English and as an adviser in relation to the bringing of appeals before various tribunals. In about 1997 he embarked on a part-time course with Holborn College leading to an LL Dip Qualification, had the taxpayer been able to take the examinations and pass them. As it was, although he twice enrolled for the examinations, he was unwell on both occasions and so was unable to sit the examinations, though he still incurred the cost of the examination fees of £200 in both 1998 and 1999. The Revenue described the course as a ‘bridging course’ towards becoming a solicitor. The taxpayer, at the age of about 53 when he enrolled on the course, had no intention of going the further step of qualifying as a solicitor. Whilst his pre-existing activities in part involved work in preparing people for hearings before tribunals, it appeared to have been predominantly related to English, translation and education.

The Revenue initially disputed the taxpayer's entitlement to relief for the second of the exam fees on the ground that the expenditure was capital expenditure, but subsequently conceded the relief on a ‘one-off or without prejudice basis because the amount claimed was so small.

The taxpayer appealed in relation to the fact that the Revenue disallowed similar relief for the earlier fee which they dealt with subsequently and complained that his human rights had been infringed.

Issue

Whether the taxpayer was entitled to a deduction in the tax year 1998-99 for £200 spent on re-sit fees for an examination for an LL Dip qualification with Holborn College, either as vocational training relief under FA 1991, s. 32, or as an ordinary trading deduction.

Decision

A special commissioner (Howard M Nowlan) (dismissing the appeal) said that the particular course was to equip the taxpayer with a new qualification that would have enabled him to venture into new areas of practice, and it was not merely a ‘refresher’ in relation to his existing expertise. That was a correct way of distinguishing between the costs in relation to courses that constituted capital as distinct from revenue expenditure. It was on that basis that relief was initially disputed for the first exam fee dealt with, and the contrary decision was only made on a ‘one off basis. The Revenue had applied the test correctly and in a manner consistently with the treatment of all other taxpayers.

The special commissioners had no jurisdiction in relation to the taxpayer's complaints about delays and other incompetence on the Revenue's part. It was not entirely clear which human rights were said to have been infringed. The taxpayer could not be compensated for alleged delays etc, and the commissioners’ only power was to arbitrate on his claim for relief, under the two particular headings. On those he had had a fair hearing and the commissioners had found in the Revenue's favour.

(2006) Sp C 570.
Decision released 1 June 2006.