Payments to son

Expenses incurred wholly and exclusively for the purposes of trade

A deduction for expenses that included wages of £7 400 that the taxpayer paid to his son while at university was claimed in his 2013-14 tax return. HMRC disallowed the son’s wages on the ground that there were no records to support this sum.

The taxpayer appealed. He said the amount was based on 15 hours a week at £10 an hour. The work involved promoting the taxpayer’s business through internet and leaflet distribution and computer work. He acknowledged that without the payments the son would have been unable to maintain his studies.

The First-tier Tribunal understood the taxpayer’s contention that he should be able to pay his son as he would anyone else who did the same work. Further had he paid him on a time-recorded basis or presented other records on how the payments were calculated...