BIM42105 - Deductions: scope of: business or non-business expense

Wholly and exclusively - brief overview

ICTA88/S74 (1)(a) prohibits the deduction of expenditure not incurred wholly and exclusively for business purposes. It is a question of law whether expenditure is capable of satisfying the test (see CIR v Dowdall O'Mahoney & Co Ltd, 33TC259 (see BIM37035) and Boarland v Kramat Pulai Ltd 35TC1 - see BIM37035). But if an expense is capable of satisfying the test, it is a question of fact whether it was incurred solely for business purposes.

Where the issue is one of fact, the decision of the Commissioners can only be overturned on appeal to the High Court if, exceptionally, it can be shown that there was no evidence on which they could reasonably have reached their decision. See Edwards v Bairstow & Harrison, 36TC207, for the principle and for the reluctance of the courts to intervene in this context.