Clothing expenses were tax deductible

It can be notoriously difficult to agree an tax deduction for clothing with HM Revenue. However a recent tax tribunal resulted in a surprise victory for the taxpayer where it was determined that clothing expenses were tax deductible. 

Clothing expenses were tax deductible

What's the background to this case?

For a number of years the tax case of Mallalieu v Drummond  has set a precedent for clothing expenditure claims. In this case a female barrister lost her claim for formal clothing (dark suits, white blouses etc) which were required in order to be allowed to appear in court. HM Revenue successfully argued that this clothing was also required for the dual purpose of warmth and decency.  

Whilst it has always been possible to claim a fixed deduction for clothing in certain professions, because of this case, accountants have been a reluctant to argue that their client's clothing expenses were tax deductible.

Gemma Daniels was a self-employed exotic dancer who performed at Stringfellows nightclub in central London. The taxman raised assessments for a number of years arguing that she had claimed excessive business expenses. HM Revenue also charged penalties on the grounds that Ms Daniels has been careless in making these claims.

Ms Daniels had claimed deductions for the cost of travel to and from her home to the club plus other items such as clothing, lingerie, dry cleaning, make-up, beauty treatments and hairdressing. She had a home office from which she carried out work-related activities and also claimed for these business related costs.

Whilst Ms Daniels lost her claim for travel between home and the clubs on the grounds that it was 'ordinary commuting (see Samadian v CRC) she won her claim for clothing expenditure.

Why did the tribunal rule that clothing expenses were tax deductible?

The tribunal accepted Ms Daniel’s evidence that the dresses she bought to perform at the club could not be worn outside. Because they were see-through and skimpy they could never be described as providing ‘warmth and decency’.  

 HM Revenue tried to argue that the lingerie could never be allowable though the tribunal disagreed stating that her attire was ‘of a suggestive nature’, used solely for her performances. Ms Daniel's shoes were also designed for pole dancing and therefore were unsuitable for outside wear.

The tribunal came to the conclusion that these items, along with expenses for make-up, perfume, hair and beauty treatment were all deductible because they were solely for the purposes of her business.

So ultimately, HM Revenue were (rather ironically) undone by their own argument in Samadian v CRC (see above). 

Whether or not your a male or female exotic dancer it's worth considering whether or not you can make a claim for clothing used for work purposes. We've covered this topic in a previous blog which you can read here.

For more useful information, check out our Ebooks here.

And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].

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