BIM37070 - Wholly & exclusively: how to establish purpose: objective or subjective test
Is the distinction relevant?
An objective approach is normally taken to mean one that is
unaffected by the personal views of the person making the decision
or judgement. In contrast, a subjective decision would vary
according to the particular preferences of the person making the
judgement.
In Robinson v Scott Bader [1981] 54TC757 (see
BIM38250) Walton J tells us, at page
767:
It follows from all this that the test [in ICTA88/S74 (1)(a)] is subjective, and not an objective one - i.e., the relevant question is ‘What was the object of the person making the disbursement in making it?’, not, ‘What was the effect of the disbursement when made?’…
So Walton J is saying that you are concerned with the purpose of the expenditure rather than the result. This is very much in contrast to capital/revenue issues - see BIM35010. This is made very clear in Bentleys Stokes & Lowless v Beeson [1952] 33TC491 (see BIM37400). The introduction of terms like ‘subjective’ and ‘objective’ does not help decide the real issue.
