When we talk to doctors about tax, one of matters most frequently raised is that of the cost of training. You can imagine how riveting those conversations are.
Training is a professional requirement but for many doctors the cost of courses comes out of their own pockets. They rightly want to know whether it is possible to obtain tax relief for these costs.
The case of CRC v Dr Piu Bannerjee (heard in the Court of Appeal) goes some way to answering some of those questions. The taxpayer worked for the NHS as a specialist registrar in dermatology. For those who aren’t familiar with the exact terminology, a registrar is still in training. Under the terms of her contract she was required to attend external training courses. She claimed back the expenses incurred in this training but HMRC argued against this.
The issue was whether the expenses incurred in attending the training courses and defrayed by the taxpayer were wholly, exclusively and necessarily in the performance of the duties of her employment. HMRC argued that attendance at the course was simply a means to better performing her duties, improving her professional skills and as part of her training. This meant that there was a duality of purpose behind the training and therefore it would not meet the test of exclusivity.
The Court of Appeal held that the taxpayer had been ‘employed exclusively for training purposes’, not just to attend to patients on the ward, but also to attend the compulsory training that was part of her obligations to her employer – and therefore there was no ‘dual purpose’ in incurring the related expenses. The result was that HMRC’s appeal was dismissed.
This case could have ramifications not just for other doctors but for other professions too with rigorous professional training requirements (such as architects, surveyors, solicitors, accountants and actuaries). Each case needs to be considered going forward, and it might be possible in some cases to amend prior returns in light of this decision.
It also highlights the benefit of proper advice in preparing tax returns.