Decision Summary Information

Back to Results | Search Again | Most Recent Decisions

Neutral Citation Number:
Reported Number:	R(H)5/07
File Number:	CH 3860 2005
Appellant:
Respondent:
Judge/Commissioner:	Judge C. Turnbull
Date Of Decision:	09/01/2007
Date Added:	22/01/2007
Main Category:	Earnings and other income
Main Subcategory:	Calculation: self employed
Secondary Category:
Secondary Subcategory:
Notes:	Calculation of income – self employed earnings - deductible expenses – whether repayments of capital on a loan used to purchase a replacement car are deductible – whether repayments of capital and interest apportionable in accordance with proportion of business use The claimant was in receipt of housing and council tax benefit for a period of approximately a year. The local authority decided that part of that benefit had been overpaid. The claimant appealed to an appeal tribunal. The issues in the appeal concerned the expenses which were deductible from the claimant’s self-employed earnings in computing the net profit of her business in accordance with regulation 31 of the Housing benefit (General) Regulations 1987 (and equivalent council tax benefit regulations) as “wholly and exclusively incurred … for the purposes of the employment”. The tribunal allowed the claimant’s appeal and directed the local authority to recalculate the claimant’s entitlement to housing and council tax benefit in accordance with the directions set out in its decision notice, which dealt with the various expenses set out in the claimant’s accounts. The claimant appealed to the Commissioner, contending that aspects of the tribunal’s decision were wrong, and that additional amounts of expenditure should have been held deductible. In particular she claimed to deduct from her profits an apportioned amount of the repayments of interest and capital on the loan for the purchase of a replacement car, used partly for business and partly for private purposes. The appeal tribunal had held that no deduction was to be made for the capital repayment on the car loan as the car did not fall under regulation 31(6) as “business equipment or machinery”. Held, allowing the appeal, that: 1. the tribunal had not erred in the method it had used to calculate the rent payable in respect of the business use of the claimant’s flat by deducting the rent officer’s valuation for a one-bedroomed flat from the actual rent for her two-bedroomed flat (paragraph 12); 2. in determining whether any, and if so what, part of the loan interest repayments for the replacement car were expenses “wholly and exclusively incurred … for the purposes of the employment” the principle of apportionment adopted in R(FC) 1/91 applied and the apportionment should be in accordance with the amount of business mileage as a percentage of total mileage in the assessment periods in which the interest was paid (paragraphs 23 to 25); 3. the same principle of apportionment applied to the capital repayments as to the interest payments because the loan had been used “for the replacement in the course of business of equipment or machinery” within the meaning of regulation 31(6)(a) and it did not matter that the claimant would have replaced the car even if she had not been carrying on a business (paragraphs 26 to 28); 4. the tribunal had not erred in treating sums of capital that were in the claimant’s accounts for very short periods as capital on which tariff income should be calculated (paragraphs 32 to 34). The Commissioner substituted his own decision setting out the further deductions to be made.
Decision(s) to Download:	R(H)_5-07_bv.doc