As a taxpayer, it’s always important to look at the facts of deductibility of expenditure and fully justify the reason for any claims you may have made. A recent court case revealed what can and cannot be deducted as expenses.
In the case of Daniels v HMRC, a self employed exotic dancer’s expenses went under scrutiny by HMRC where she spent £8,629.48 on clothing, underwear, cosmetics and hair extensions.
Ms Daniels travelling expenses were not allowable as they had a dual purpose. They were incurred to travel from home to work and back again. The costs also include travel form her home office location to her place of work at the club in London.
Clothing & Shoes
Ms Daniels wore clothing that would not be suitable to be worn outside the club. The clothes she wore were long, see through and were frequently decorated with sequins so they shine under the lights. Her costumes also include ‘nurse’ and ‘schoolgirl’ uniforms for fancy dress evening.
The shoes she wore were six to ten inch stiletto heels and were made so that it was possible to hang upside down from a pole during performance.
The tribunal accepted that all of the above mentioned were bought to perform at the club and could not be worn outside, and therefore considered as deductible expenses.
Cosmetics & Perfume
Ms Daniels’ makeup has to be in over the top manner in order to last the whole evening. She also claimed that she did not wear this makeup outside her work.
She also said that she did not wear perfume other than for her performances as she did not want this perfume to feature in her everyday life to remind her of her dancing job.
The tribunal considered that she incurred the expenditure wholly and exclusively for the purposes of her performances, and therefore deductible.
Hairdressing & Beauty Treatments
Ms Daniels’ hairdressing and beauty treatment expenditures were considered allowable by the tribunal as these expenditures were incurred to enhance her appearance for the purposes of her performance. It may have been that her appearance in her everyday life was also changed by these, but that was not the sole purpose of incurring these expenditures.
Ms Daniels only had to pay penalty for the incorrectly claimed travelling expenses as everything else was incurred wholly and exclusively for the purposes of her performance