BIM50620 - Athletes: Expenses
Professional athletes are subject to the same general rules as other persons exercising a trade, profession or vocation, see BIM31000 onwards. This means they are entitled to deduct a range of expenses incurred in earning the profits of their professional activities subject to the general rule that the expense must be incurred wholly and exclusively for the purposes of their profession. This rule is found in ITTOIA/S34. Where an expense is incurred for more than one purpose the wholly and exclusively rule will usually prevent a deduction from being allowed. However, where an identifiable part or proportion is incurred wholly and exclusively for the purposes of the athlete’s profession, that part is deductible. Authority for this is found in ITTOIA/S34(2) and guidance on this is at BIM37000 onwards.
This guidance is intended to explain the principles as applicable to professional athletes. It does not cover every situation or expense. HMRC would expect that in most cases it will be relatively clear whether or not an expense has been incurred wholly and exclusively for the purposes of the athlete’s profession.
Some expenses are likely however to cause difficulty where there is an intrinsic duality of purpose, see BIM37900 onwards. Medical expenses including physiotherapy, special diets and training expenses are typical examples where the purpose of the expenditure may not be an exclusively professional one.
The cases of Norman v Golder [1944] 26TC293 (BIM37940) where it was concluded that doctors bills inevitably have a non trade purpose, Murgatroyd v Evans-Jackson [1966] 43 TC 581 (BIM37950) where nursing home fees were disallowed because recovery from ill health was not a trade purpose and Prince v Mapp [1969] 46TC169 (BIM37945) where surgery costs to allow Mr Prince to play the guitar were disallowed, should all be considered in connection with medical expenses.
More recently the First Tier Tribunal in Parsons v HMRC Commissioners [2010] TC 00421, following the principles established in Mallalieu v Drummond [1983] 57TC330 (BIM37910), considered the medical and chiropractor expenses of a stunt man. In this case the Tribunal considered that the cost of a knee operation, chiropractor and masseur expenses could be allowed because the expenditure had a special character dictated by the occupation as a matter of physical necessity and any private purpose was an unavoidable effect of the expenditure. The expenses were therefore only incurred for the purposes of his profession. Other expenses associated with general health and fitness were disallowed.
With the above in mind, HMRC takes the view that expenditure that would normally be considered to have an intrinsic duality of purpose, be it medical including physiotherapy, nutritional or sports training may be deductible in the case of professional athletes where it is far removed from their ordinary needs as human beings and is of a special character dictated by their occupation as a matter of physical necessity and any private purpose is an unavoidable effect of the expenditure. For example, physiotherapy treatment in the course of a competition immediately before or after an event where any personal benefit is marginal may be deductable. Similarly, nutritional advice, supplements and training costs where the advice etc was so specific as being directly tailored to the particular athletic discipline may be deductible. A similar rationale may be applied to medical expenses although it must be noted that it will be more exceptional for medical costs to be allowable.
Whether an expense is ultimately deductible will remain dependent on the specific facts of each case.
