Musical expenses

A musician toured for much of the 1980s and 1990s working with established members of the music business. From 2000 his touring and session work reduced considerably and he had to find other means of making a living.

He became employed at a school at which his earnings were taxed under PAYE. He also played in a band and worked as a guitar teacher.

In his 2006/07 tax return the taxpayer claimed expenses and capital allowances in respect of his music tuition which resulted in an overall loss of £6 181.

HMRC enquired into this aspect of the taxpayer’s return. The result was that the expenditure was restricted to 10%.

The taxpayer appealed.

The First-tier Tribunal agreed with the taxpayer that he continue to trade as a musician and that teaching music formed...