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Duckmanton v CRC, Upper Tribunal (Tax and Chancery Chamber)
The taxpayer operated a transport business. One of the his lorries killed a pedestrian in September 2002; the driver was charged with manslaughter and sentenced to 12 months’ imprisonment.
The taxpayer was charged with gross negligence manslaughter and attempting to pervert the course of justice. He was acquitted of the former offence but sentenced to eight months’ in gaol for the latter.
He claimed the cost of the legal fees incurred as a deduction in the accounts of the business for the accounting periods ended 31 August 2003 2004 and 2005 on the basis his main concern in defending the charges against him had been to protect his firm.
HMRC did not allow the claim; he appealed.
The First-tier Tribunal dismissed the action ruling that the expenditure had not been incurred wholly and exclusively for the purposes of the taxpayer’s trade (ITTOIA 2005 s 34).
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