A special commissioner decided that expenditure by a professional rugby player on additional food, nutritional supplements and medicines was not incurred exclusively and necessarily in the performance of his duties of employment.

Facts

The taxpayer was a professional rugby union prop forward. Under his contract of employment with successive clubs the taxpayer was required to maintain the appropriate level of fitness.

The taxpayer appealed against amendments to his self-assessment tax returns for 1999–2000, 2000–01 and 2002–03. The dispute concerned whether costs in respect of food and nutritional and vitamin supplements incurred by the taxpayer were deductible from his income earned as a professional rugby player under ICTA 1988, s. 198.

The taxpayer contended that he incurred expenditure on additional food, nutritional supplements and medicines to maintain the required level of physical fitness for his employment as a professional player.

The Revenue countered that the expenditure did not qualify as a deduction from earnings because it was not incurred exclusively and necessarily in the performance of his employment duties.

The taxpayer restricted his claim for tax relief to the cost of the additional food as represented by the additional calories consumed by him in excess of the 3,000 daily calories required for a moderately active male. The taxpayer assessed the actual claim as 50 per cent of his annual food expenditure. The nutritionists stated that a professional rugby union player required 6,000 to 7,000 calories daily, which was higher than the taxpayer's average daily consumption of 4,500.

The Revenue considered that the facts did not satisfy the exclusivity and necessarily hurdles for expenditure relief. The taxpayer's attempt to apportion his food expenditure between the necessity of living and playing rugby union football was wholly unrealistic and not supported by the facts.

Issue

Whether the expenditure in question was incurred exclusively and necessarily in the performance of his duties of employment.

Decision

The special commissioner (Michael Tildesley) (dismissing the appeal) said that, on the facts of this case, the taxpayer's expenditure on additional food, nutritional supplements and medicines was not incurred exclusively and necessarily in the performance of his duties as a professional rugby union prop forward.

It was common ground between the parties that ICTA 1988, s. 198 was notoriously rigid, narrow and to some extent unfair in its operations. The taxpayer had to satisfy four requirements to be eligible for relief under s. 198 which were that the expenses in question were incurred in the performance of the duties of his employment, and they were necessarily, wholly and exclusively so incurred. The parties agreed that the requirement of wholly was not in dispute as it went to quantum.

Under the first requirement, in the performance of the duties of his employment the taxpayer had to demonstrate that the duties themselves obliged him to incur the disputed expenditure and the act giving rise to the expenditure was done in the actual performance of such duties. An act which was done merely to acquire the necessary qualifications or the background knowledge necessary to do the job or to do it better was not sufficient (Simpson (HMIT) v Tate [1925] 2 KB 214; 9 TC 314 and Humbles (HMIT) v Brooks (1962) 40 TC 500 considered).

On the facts found the taxpayer was not required by his contract or his employers to expend money on additional food, nutritional supplements and medicines in order to maintain the required level of fitness. The duties of the taxpayer's job required him to maintain levels of fitness but did not oblige him to eat and take medicines which were the acts giving rise to the expenditure in question.

The facts of the appeal supported a construction that the taxpayer was taking the additional food, nutritional supplements and medicines to prepare him for his duties as a prop forward, not as part of his duties. His expenditure on the items put him in the position to carry out his job competently and enabled him to perform better as a prop forward. That expenditure was one step removed from the performance of his employment duties. Thus the taxpayer's expenditure on additional food and nutritional supplements was not incurred in the performance of his duties of employment as a rugby union prop forward.

The second requirement of necessarily incurred was determined objectively. All holders of the particular employment had to incur the expense (Ricketts v Colquhoun (1926) 10 TC 118). The duties of employment could not be performed without incurring the expense (Brown v Bullock (1961) 40 TC 1). The expenditure was not incurred voluntarily, or wholly or mainly by reason of his own personal circumstances (Ansell v Brown [2001] BTC 381; 73 TC 338). The taxpayer chose to consume additional food and nutritional supplements and to take medicines. His employers did not compel him to incur the expenditure. Therefore, the disputed expenditure was not necessarily incurred in the performance of his duties.

The third requirement of exclusively incurred was met if the taxpayer could show that the disputed expenditure was solely attributable to the performance of his duties and any other purpose secured from the expenditure was merely incidental. In that respect the taxpayer faced a major hurdle as prima facie the items purchased were those that were necessary to sustain a healthy life (Norton v Golder (1944) 26 TC 293 considered).

The taxpayer had submitted that he was not claiming the cost of food to maintain life but instead deducting the expenditure on the additional food necessary to maintain his fitness levels as a prop forward. Further the amount of extra food consumed would be positively harmful to the health of a person who was not a professional rugby union player. The medicines purchased protected his body from the ravages of his employment. The facts found, however, painted a different picture. The expenditure incurred on additional food, nutritional supplements and medicines was governed by the requirements of a balanced diet and healthy living which secured enduring health benefits for the taxpayer as well as enabling him to perform his employment duties. There was a duality of purpose for the purchases, and, therefore, the expenditure on additional food, etc. was not incurred exclusively for the performance of his duties of employment.

(2008) Sp C 668.
Decision released 11 February 2008.