Apportionment and duality
10/06/2021

When deciding whether an expense is allowed or disallowed it is important to consider that the expenditure must be incurred wholly and exclusively for the purposes of your trade or employment. 

Under the legislation any expenditure not incurred wholly and exclusively for the purposes of the trade, profession or vocation should be disallowed. HMRC takes a slightly more relaxed view that a strict reading of the legislation would suggest. 

One of the main points HMRC examines when considering the application of the ‘wholly and exclusively’ test relates to apportionment and duality.

In this regard, HMRC’s internal manuals state that:

When you consider the application of the ‘wholly and exclusively’ test, it is important that you distinguish between cases where:

  1. a definite part or proportion of an expense has been laid out or expended wholly and exclusively for the purposes of the trade, profession or vocation. That part or proportion should not be disallowed on the ground that the entire expense is not laid out or expended wholly and exclusively for the purposes of the trade, profession or vocation,
  2. an expense has been incurred for a dual purpose. Such expenditure should be disallowed.

For example, when considering the running costs of a car used partly for the purposes of the trade and partly for other purposes, HMRC’s position is that the costs apportioned to the business use of the car would be deductible. 


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