For anyone who aspires to a life ‘messing about on the water’ and getting tax relief on the required expenditure, a recent tax case may prove something of a dampener.

The case involved a British author who was intending to write a book about life on a boat in France. He argued that the cost of transporting his boat to the Mediterranean and mooring it at Port Grimaud was a business expense as it was incurred in his capacity as a professional writer. The boat remained in France for several years and during the summers he spent considerable time on it. He also spent some time on it during other parts of the year.

In his 2006/2007 tax return, he claimed tax relief as business expenditure on:

  1. certain work undertaken on the boat in preparation for its voyage to France;
  2. the transport of the boat from the UK to France; and
  3. the cost of mooring the boat at Port Grimaud.

These expenses totalled more than £20,000. Originally, he claimed 50 per cent of the total, but subsequently claimed the whole of the expenditure incurred.

The author had gone on to make similar claims for subsequent years, the allowability of which turned on the decision in this case. During the period to which the claim related, he also carried out other paid writing work on a daily basis.

The First-tier Tribunal ruled that the cost of transporting the boat to France and incidentals relating to that were business expenses and thus allowable. However, the other expenses were of a dual purpose, being both business and personal expenditure, and were thus not allowable deductions for Income Tax purposes.

Although the Tribunal did not regard the fact that the writer’s book had not yet found a publisher or got beyond draft stage as relevant, one cannot but speculate that he might have had a more sympathetic hearing had his book been completed and published.

The case is a good guide to the limits HM Revenue and Customs will place on allowable expenses in such cases.


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