Tax cases

Business expenses

In the first appeal N Ltd organised a function for potential clients spending £1 800 on catering and £681 on room hire. The company claimed both sums as trading expenses on advertising or promotion rather than hospitality or entertainment. HMRC disallowed the claim saying it was business entertainment within TA 1988 s 577.
In the second appeal K Ltd claimed that losses incurred by the company between 1991 and 1995 should be offset against profits for the 1998-2000 accounting periods. HMRC claimed that the company's activities had changed in that before 1995 it provided goods and after 1997 its business was mainly the provision of services. Thus relief could not be given under TA 1988 s 393(1) since the nature of K's trade in which the losses happened ended in 1995 or had substantially changed in nature....