In HMRC v Jayanth Kunjur [2023] UKUT 154, the Upper Tribunal (UT) confirmed no tax relief is available for the accommodation expenses paid by a junior doctor. While renting accommodation close to his hospital enabled him to perform some of his duties, the expense was not incurred in the course of the performance of his duties.

  • Mr Kunjur trained as a junior doctor between 2012 and 2016 at St George's Hospital in Tooting.
  • Formerly a dental surgeon with 17 years of experience, he had retrained as a maxillofacial surgeon.
  • His job required him to be on-call for two nights a week and within 30 minutes of the hospital. He also needed to take phone calls during the night, which happened most nights.
  • His home was in Southampton, and he rented living accommodation close to the hospital to ensure that he could be on call.
  • Mr Kunjur claimed a proportion of the rental expenditure as a deduction from employment income in his tax returns.
  • HMRC denied the deductions, raising assessments and Closure Notices for the years in question.
  • On appeal to the First Tier Tribunal (FTT), it was held that Mr Kunjur had to meet the three elements of s.336(1) ITEPA 2003:
    • Mr Kunjur was obliged to incur the expenditure as part of his employment. The test could be subjective when applied to employees. Mr Kunjur had to be within 30 minutes of the hospital for on-call duties and it was unreasonable to expect him to move his family to London for a temporary training contract.
    • In determining whether the expenditure was incurred wholly, exclusively and necessarily in the performance of his duties, the FTT split this into 2 parts:
      • It was decided that very little personal benefit was derived from the accommodation, save for the time used preparing research articles for his training.
      • The FTT held that providing advice and writing articles from the accommodation meant that it was used in the performance of his duties for some of the time.
    • When considering all three elements, the FTT decided that a partial deduction should be allowed equating to the time spent giving advice from the accommodation.

HMRC appealed to the UT on the basis that the FTT had erred in law in its approach to the tests required and had reached perverse conclusions. The UT found that:

  • s.336(1) ITEPA 2003 is a cumulative test.
  • Whether Mr Kunjur was obliged to incur the expenditure was an objective test, not a subjective one.
  • The decision to rent accommodation near the hospital was a personal decision driven by Mr Kunjur's personal circumstances. Objectively, other trainee doctors may not have needed to incur such expenditure in relation to their employment. The obligation did not arise because of his employment.
  • 'Wholly, exclusively and necessarily' is a test aimed at preventing dual purpose and private benefit.
  • The UT noted the test as applied in Mallalieu v Drummond [1983] STC 665 could establish a business objective with the effect of causing a personal advantage. In such a case, the personal advantage did not necessarily prevent an exclusive business purpose. Although the case was regarding a self-employed individual the analysis was the same for employees. The FTT did not consider this in their arguments. Even if they had, the UT concluded that Mr Kunjur incurred the expenditure for both business and personal purposes, so the wholly and exclusively and necessarily test was not met.
  • Case law has repeatedly proven that expenditure that puts someone in the position to perform their duties is not the same as incurring the expenditure 'in the performance' of their duties. Mr Kunjur's expenditure fell into the former category not the latter.

The UT held that the FTT had erred in law on all three elements and it remade the decision. Mr Kunjur failed on all three elements and so was not entitled to a deduction under s.336(1). The appeal was allowed.

Useful guides on this topic

Accommodation costs were wholly, exclusively and necessarily incurred
In Jayamth Kunjur v HMRC [2021] TC08296, the First Tier Tribunal (FTT) found that a proportion of accommodation costs incurred by an employed dental surgeon were deductible from employment income. 

Wholly and exclusively...toolkit
When is an expense allowed for tax purposes? What does 'wholly and exclusively' mean? How do you determine if a cost is wholly and exclusively incurred for the purpose of a trade? What cases are there?  

Accommodation: With travel or temporary workplaces
What cash allowances can be provided for business travel? What qualifies as business travel? What tax relief is available for accommodation?

External link

HMRC v Jayanth Kunjur [2023] UKUT 154 


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