Question: Husband and wife partnership: Allowable travel expenses
The husband is a partner for profit sharing purposes only, and is not involved in the business. Wife has to travel a lot for the business and stays in hotels. Husband always accompanies her and all expenses for both of them are recorded in their bookkeeping (i.e. eating out, train costs, hotels etc.). As the husband is not involved in the business purpose of these trips (e.g. meetings and clients would not know of him), can all travel expenses be claimed as tax deductible or should I be disallowing 50% of travel costs, eating out etc.?
Arthur Weller replies:
Answer: I believe that you should be disallowing 50% of travel costs, eating out etc., as you have written. The husband’s costs are not 'wholly and exclusively' for the purpose of the trade. See HMRC’s Business Income manual at www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37610, where the expenses of the spouse were not even initially claimed.