PRINCIPLES OF TAXATION FOR BUSINESS AND
INVESTMENT PLANNING 2026 FINAL PAPER
REVIEW QUESTIONS ANSWERS BUNDLED
PRACTICE COLLECTION
◉ Caillebotte v Quinn
Answer: a self empoyed carpenter tried to deduct the difference
between eating at home and (10p) and eating in a cafe (40p) when
he was working away from home BUT denyed as food has the dual
purpose of 'eating to live'
◉ Parsons v R&C Commrs
Answer: stunt performer was allowed to deduct dental and medical
expenses
◉ interfish v hmrc
Answer: Fishing company paid £1.2m to sponsor Plymouth Albion
rugby club. They tried to claim fully deductible BUT court said it has
the dual purpose of improving the rugby clubs finanical position as
well as benefiting interfish --> if they could have seperated the cost
of advertiisng eg logos on players shirts then this part could have
been deductible
,◉ revenue vs capital expenditure
Answer: 1. Revenue is recurring in nature + expected to be used up
in the course of trading + maintains assets rather than improves
- receipts from the sale of information
- compensation for cancellation of small commerical contracts
2. capital is often a 1 off expnse which creates a long lasting asset or
enduring benefit (eg future reduced payments)
But there is no definition --> it is largely based on previous case law
◉ expenses specifically disallowed as deducable for self employed
Answer: - fines / penalties / illegal payments (parking fines for
employees okay but never speeding tickets or for directors)
- gifts if >£50 of food, tobacco or alcohol and don't advertise
business logo to customers (employees okay)
- entertainment to customers BUT employyes okay (if >£150 per
person then BIK arises)
- education for new skills
- appropriation of wages --> include in taxable profit (includes own
NICs)
- legal charges not related to business expenditure or capital in
nature eg buying new van
- provisions unless specific --> not just provision for doubtful debts,
only debts written off
- amounts spent on improvemnts to an asset
,- not trade debts written off eg staff loan written off
◉ revenue expenditure for self employed
Answer: - education for exisiting skills / knowledge
- amounts spent on repairs (restoring to original condition) UNLESS
repair was undergone soon after purchase + got cheap price coz it
needed to be repaired --> then capital expenditure
- cost of repairing / replacing part of an asset NOT entirity of it
- professional and legal fees relating to revenue expenditre (eg trade
debt collection) NOT fees incurred during tax appeals
- interest on business loans / overdrafts / hire purchase agreements
if they meet wholly + exclusive rule --> any private use is not
deductible or interest on overdue tax
- if interest paid on the loan is deductible then cost of obtaining the
loan is also (fees, advertising, printing but not stamp duty)
- redundancy payments limited to 4x statuory amount for each
employee
- donations to local charities
- trade debts written off
- charity work
◉ what is the exception to expenses being deducted in the year they
accure not the year they are paid?
, Answer: 1. payments to employees --> if payment is made more than
9 months after the end of the accounting period then deduction is
disallowed and deffered to next year
2. pension contributions --> deductible in year they are paid
◉ in regards to business tax, if a good is taken from the business for
personal use how is it valued when disposed of
Answer: at market price not cost as a trading reciept
◉ are voluntary payments trading receipts?
Answer: no --> if payment not linked to future trading relations or
not connected to profits earnt
◉ what is the simplified expenses scheme?
Answer: available to soletraders and partnerships to use flat rate
expense deductions
1. business mile expenses can be claimed using SES if you are
eligible to use cash basis --> same as company car milage rates
(45p/mile for first 10k then 25p/mile + 24p/ mile for motorbikes)
2. use of your home to work from based on the number of hours
your home is used for work purposes (25-50hrs/month = £10, 51-
100hrs/month = £18, 101+ hrs/month = £26)
3. premisies used for business and home based on number of
occupants you have in your house per month (1 occupant =
£350/month, 2 = £500/month, 3+ = £650/month)
INVESTMENT PLANNING 2026 FINAL PAPER
REVIEW QUESTIONS ANSWERS BUNDLED
PRACTICE COLLECTION
◉ Caillebotte v Quinn
Answer: a self empoyed carpenter tried to deduct the difference
between eating at home and (10p) and eating in a cafe (40p) when
he was working away from home BUT denyed as food has the dual
purpose of 'eating to live'
◉ Parsons v R&C Commrs
Answer: stunt performer was allowed to deduct dental and medical
expenses
◉ interfish v hmrc
Answer: Fishing company paid £1.2m to sponsor Plymouth Albion
rugby club. They tried to claim fully deductible BUT court said it has
the dual purpose of improving the rugby clubs finanical position as
well as benefiting interfish --> if they could have seperated the cost
of advertiisng eg logos on players shirts then this part could have
been deductible
,◉ revenue vs capital expenditure
Answer: 1. Revenue is recurring in nature + expected to be used up
in the course of trading + maintains assets rather than improves
- receipts from the sale of information
- compensation for cancellation of small commerical contracts
2. capital is often a 1 off expnse which creates a long lasting asset or
enduring benefit (eg future reduced payments)
But there is no definition --> it is largely based on previous case law
◉ expenses specifically disallowed as deducable for self employed
Answer: - fines / penalties / illegal payments (parking fines for
employees okay but never speeding tickets or for directors)
- gifts if >£50 of food, tobacco or alcohol and don't advertise
business logo to customers (employees okay)
- entertainment to customers BUT employyes okay (if >£150 per
person then BIK arises)
- education for new skills
- appropriation of wages --> include in taxable profit (includes own
NICs)
- legal charges not related to business expenditure or capital in
nature eg buying new van
- provisions unless specific --> not just provision for doubtful debts,
only debts written off
- amounts spent on improvemnts to an asset
,- not trade debts written off eg staff loan written off
◉ revenue expenditure for self employed
Answer: - education for exisiting skills / knowledge
- amounts spent on repairs (restoring to original condition) UNLESS
repair was undergone soon after purchase + got cheap price coz it
needed to be repaired --> then capital expenditure
- cost of repairing / replacing part of an asset NOT entirity of it
- professional and legal fees relating to revenue expenditre (eg trade
debt collection) NOT fees incurred during tax appeals
- interest on business loans / overdrafts / hire purchase agreements
if they meet wholly + exclusive rule --> any private use is not
deductible or interest on overdue tax
- if interest paid on the loan is deductible then cost of obtaining the
loan is also (fees, advertising, printing but not stamp duty)
- redundancy payments limited to 4x statuory amount for each
employee
- donations to local charities
- trade debts written off
- charity work
◉ what is the exception to expenses being deducted in the year they
accure not the year they are paid?
, Answer: 1. payments to employees --> if payment is made more than
9 months after the end of the accounting period then deduction is
disallowed and deffered to next year
2. pension contributions --> deductible in year they are paid
◉ in regards to business tax, if a good is taken from the business for
personal use how is it valued when disposed of
Answer: at market price not cost as a trading reciept
◉ are voluntary payments trading receipts?
Answer: no --> if payment not linked to future trading relations or
not connected to profits earnt
◉ what is the simplified expenses scheme?
Answer: available to soletraders and partnerships to use flat rate
expense deductions
1. business mile expenses can be claimed using SES if you are
eligible to use cash basis --> same as company car milage rates
(45p/mile for first 10k then 25p/mile + 24p/ mile for motorbikes)
2. use of your home to work from based on the number of hours
your home is used for work purposes (25-50hrs/month = £10, 51-
100hrs/month = £18, 101+ hrs/month = £26)
3. premisies used for business and home based on number of
occupants you have in your house per month (1 occupant =
£350/month, 2 = £500/month, 3+ = £650/month)
