Law Report: Journalists allowed newspaper costs: Smith (Inspector of Taxes) v Woodhouse and others - Court of Appeal (Lord Justice Ralph Gibson, Lord Justice Mann and Lord Justice Nolan), 15 March 1993

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Allowances paid to journalists for the costs of buying newspapers and periodicals were a tax deductible expense if the journalist taxpayers read the newspapers and periodicals as part of the performance of their duties of employment and not to maintain their qualifications to carry out their employments.

The Court of Appeal dismissed four appeals by the Inland Revenue and allowed an appeal by a journalist from Mr Justice Warner's decision (the Independent, 1 November 1991) that four out of five journalists were entitled to deduct newspaper allowances as expenses.

The five taxpayers were journalists employed by Associated Newspapers Ltd. G Woodhouse was the picture editor of the Mail of Sunday; T R Shuttleworth, B S Scovell, K P Holt and P J Abbott, were an assistant chief sub-editor, a sports reporter, a staff photographer and a news layout journalist respectively for the Daily Mail.

The City of London commissioners found that it was necessary for each journalist to read newspapers and periodicals to be equipped for the performance of his duties of employment and that newspaper reading was an essential part of his duties.

Alan Moses QC, and Nicholas Warren (Inland Revenue Solicitor) for the Revenue; Peter Whiteman QC, and Marion Simmons (Berwin Leighton) for the journalists.

LORD JUSTICE NOLAN said that the commissioners had to ask themselves whether the reading of newspapers and periodicals should be regarded as a means of maintaining the general qualification and fitness of the taxpayers to carry out the employments which they held, or whether it formed part of the daily peformance of the duties of those employments.

That was not merely a question of fact, but a matter of practical experience and judgment. The commissioners' conclusion appeared to follow reasonably and almost inevitably from their primary findings.

The submission that the reading could be regarded as a means of adding to the taxpayers' qualifications seemed to ignore the short- lived and almost ephemeral nature of the benefit thus acquired. They were studying the news, not history. The purpose which their reading served was the production of the next edition of the Daily Mail or the Mail on Sunday.

LORD JUSTICE MANN and LORD JUSTICE RALPH GIBSON agreed.

Ying Hui Tan, Barrister

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