In Alan Nicholson v HMRC [2018] TC06293, the tribunal disallowed a sole trader's payments made to and on behalf of his son as wages, whilst at university: the expenditure was not wholly and exclusively incurred 

A sole trader may claim tax relief for expenses incurred Wholly and Exclusively for the purposes of the trade. Apportionment may be possible where only part of a cost is for business purposes.

  • Mr Nicholson was a self employed central heating salesman and was building up an internet business. He claimed an expense of £7,400 as wages on his 2013/14 SA return.
  • The wages were calculated as £10 per hour for 15 hours each week and were paid to his son for “the promotion of the business through internet and leaflet distribution and computer work”.
  • Payment was made to his son as a mixture of cash and for meeting his weekly food bills and payment of his expenses at university. No contemporaneous records of the amounts paid as wages were available.

HMRC disallowed the cost on the basis that the father was remunerate his son for the work done but also out of “natural parental love and affection” to maintain him while attending university.

The taxpayer argued that he required assistance in online marketing. However, he conceded that his son’s wages were “made up of cash and goods bought on credit cards".

The First Tier Tribunal (FTT) disallowed the wages: there was no direct relationship arithmetically or otherwise between the amount of work done and the payments made, whether in cash or in kind. The taxpayer was helping to support his son whilst at University, the payments had a dual purpose and so were not wholly and exclusively for the purposes of the trade.


The case has some similarities to that of ex-MP Derek Conway who was expelled from the conservative party in 2009 after claiming that his student sons were working full time as his parliamentary researchers.

Mr Nicholson might have had more success if he had engaged his son under a formal contract of employment, had paid him on the basis of hours actually worked and it had been able to demonstrate the actual work done.


What expenses can I claim? Wages: spouse & family

Wholly and Exclusively


Alan Nicholson v HMRC [2018] TC06293