Medical expenses


D

Dave

One of my clients, a self-employed builder, used a private Osteopath to
treat him for back pain.
The amount involved is minimal £105.
He states that the back injury was caused during his building activities,
and that the Osteopath has advised that all such expenses are 100%
deductible.
For this claim I doubt if HMRC would be too bothered as all the other
details within the accounts are not questionable. My only real concern for
my client is where to enter the claim - Other expenses maybe?

The other issue that bother me slightly is that my client paid for treatment
when he could have used the NHS (?) How far might HMRC allow private medical
expenses to be claimed from sole traders?

( I also have a similar claim with a client who works abroad in a circus )

Would appreciate any guidance on this please.
 
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R

Ronald Raygun

Dave said:
The other issue that bother me slightly is that my client paid for
treatment when he could have used the NHS (?) How far might HMRC allow
private medical expenses to be claimed from sole traders?
This falls under the general principle of whether opting for a more
expensive solution than necessary is allowable. Another example might
be going somewhere by taxi when one could have taken the bus.

One could argue that going the NHS route would have involved waiting
longer to receive treatment, thus (a) prolonging one's suffering and
(b) delaying the chap's return to being fully fit to work again, thereby
making the case that the additional expense of the private route was
"necessary".

However, in the case of self-employment, the rule is that for an expense
to be allowable, it must have been incurred "wholly and exclusively" for
business reasons (and receiving medical treatment for a problem arising
from business duties fully meets that requirement). Because the requirement
is *not* "wholly, exclusively, and necessarily", there is no need to make a
case for the expense being necessary, it is allowable even if unnecessary.
 
D

Dave

Ronald Raygun said:
This falls under the general principle of whether opting for a more
expensive solution than necessary is allowable. Another example might
be going somewhere by taxi when one could have taken the bus.

One could argue that going the NHS route would have involved waiting
longer to receive treatment, thus (a) prolonging one's suffering and
(b) delaying the chap's return to being fully fit to work again, thereby
making the case that the additional expense of the private route was
"necessary".

However, in the case of self-employment, the rule is that for an expense
to be allowable, it must have been incurred "wholly and exclusively" for
business reasons (and receiving medical treatment for a problem arising
from business duties fully meets that requirement). Because the
requirement
is *not* "wholly, exclusively, and necessarily", there is no need to make
a
case for the expense being necessary, it is allowable even if unnecessary.
Many thanks for your time and guidance.
It is appreciated.

Dave
 
M

Martin

Ronald Raygun said:
This falls under the general principle of whether opting for a more
expensive solution than necessary is allowable. Another example might
be going somewhere by taxi when one could have taken the bus.

One could argue that going the NHS route would have involved waiting
longer to receive treatment, thus (a) prolonging one's suffering and
(b) delaying the chap's return to being fully fit to work again, thereby
making the case that the additional expense of the private route was
"necessary".

However, in the case of self-employment, the rule is that for an expense
to be allowable, it must have been incurred "wholly and exclusively" for
business reasons (and receiving medical treatment for a problem arising
from business duties fully meets that requirement).
Hi RR. You seem to be confusing "for" (the future benefit) and "from"(the
cause).

And why do you say it's "wholly".... does the OP's client's back only hurt
at work...?

I think you'll find it's not deductible - and that's before thinking about
the capital nature of the treatment ("... enduring benefit" etc)
 
D

Dave

Martin said:
Hi RR. You seem to be confusing "for" (the future benefit) and "from"(the
cause).

And why do you say it's "wholly".... does the OP's client's back only hurt
at work...?

I think you'll find it's not deductible - and that's before thinking about
the capital nature of the treatment ("... enduring benefit" etc)
Hi Martin,
My thoughts are along the lines of RR, in that my client stated that the
injury was caused undertaking his self employed duties, and therefore the
question of if his back hurts outside of work is not really an issue.
 
M

Martin

Dave said:
Hi Martin,
My thoughts are along the lines of RR, in that my client stated that the
injury was caused undertaking his self employed duties, and therefore the
question of if his back hurts outside of work is not really an issue.
Dave - IMHO, and as mentioned to RR, the cause of the injury isn't the
issue.

As I often find myself saying to clients, logic / common sense / fairness
are not prominent features of the tax rules. There are a few exceptions to
the "duality of purpose" rules (which then permit apportionment), but I fear
your case isn't one of them.

Have a read of this....
http://www.hmrc.gov.uk/manuals/bimmanual/BIM37950.htm

Not quite the same circumstances, but note that the cause of the injury was
not an issue. It was the inevitable non-business benefit which mattered,
and apportionment was disallowed.

In your client's case, it's thankfully only relief on £105 which is at
stake - so somewhere between 28% and 41% (unless he's in the new 50%
band...).

I'm happy to be proved wrong on all this, but given the tax treatment of
such things (including medical insurance) under Sch. E, I'd be very
surprised if the self-employed qualify for any better tax treatment - harsh
as that may seem.
 
R

Ronald Raygun

Martin said:
Dave - IMHO, and as mentioned to RR, the cause of the injury isn't the
issue.

As I often find myself saying to clients, logic / common sense / fairness
are not prominent features of the tax rules.
But logic is *always* a feature of legal judgements. It's just that the
legal logic used in courts is not always the same as that of the man on
the Clapham omnibus.
I believe the judge erred in this case, and had it been referred to a
higher court, the ruling may have been different. As I see it, the
nursing home costs in that case *were* Wh&Ex incurred for business
purposes, given that the cost of the actual treatment would have been
free on the NHS, and the taxpayer's reason to receive it privately
was solely to enable him to carry on his business during the recuperative
period, which he could not have done by opting for the NHS. It may have
been the taxpayer's mistake, by claiming a portion of the costs, to admit
to a duality of purpose, or it may not, we are denied the deeper facts. The
basis on which he arrived at the apportionment may be relevant. It seems to
me that it should at least be valid to claim the nursing home residential
cost in full, and to deny at most the cost of the actual treatment.
 
R

Ronald Raygun

Martin said:
Hi RR. You seem to be confusing "for" (the future benefit) and "from"(the
cause).
I'm not confusing them, but both are issues which need to be dealt with.
And why do you say it's "wholly".... does the OP's client's back only hurt
at work...?
It might well, it depends on what he does at work. As a builder he might
well be involved in lifting heavier loads at work than elsewhere, but
let's say no.
I think you'll find it's not deductible - and that's before thinking about
the capital nature of the treatment ("... enduring benefit" etc)
I disagree. There are two aspects to why it should be allowable on "wholly"
grounds, namely cause and purpose.

The cause of the injury was not an issue in the BIM case you cited,
but is, I suggest, an issue in the present case.

Had the injury been caused by something he did at work as an employee, with
the slightest hint that some blame might attach to the employer, then it
would have been the employer's responsibility to compensate the employee
by at least bearing the cost of treatment. There is no question in such
case that the expense of compensating the employee would be deductible
as far as the employer is concerned, and would not be a BiK as far as
the employee is concerned (is there?). In principle a self-employed person
should be in no worse a position than an employee, so when such a person
sustains an injury *at work*, he should be allowed to "compensate himself"
on a similar basis.

There is no duality of purpose because although the direct benefit of
the treatment is to make him fit not only for work but also for, er,
rest and play, the point is that it was work which made him unfit to begin
with. The purpose of the treatment is not to provide a benefit, but to
right a wrong caused by work.

The other aspect is the purpose of receiving treatment for the injury.

Supposing the injury had been sustained while not at work, so that the
above cause argument could not be made. I maintain that there is still
no duality of purpose in incurring the expense of private treatment.
This is because the cost of the treament is in principle zero, by using
the NHS option. The purpose of incurring the expense by opting for private
treatment is not to *provide* the treatment (since it is available for
free), but to *expedite* it. I suggest that expediting the treatment
carries no personal benefit, only business benefit. Hence no duality, and
"wholly and exclusively" is satisfied.
 
M

Martin

Ronald Raygun said:
Martin wrote:
< snip >

Hi RR - I disagree with all or most of what you are suggesting, and will try
to respond more fully when time allows.

For now, I remain convinced it is not claimable. Even if all your other
arguments stand up (which I doubt) I'm sure a claim would fall at the
oft-quoted hurdle of "... putting him in a position to work ...".
 
R

Ronald Raygun

Martin said:
Hi RR - I disagree with all or most of what you are suggesting, and will
try to respond more fully when time allows.
Thanks, I look forward to it.
For now, I remain convinced it is not claimable. Even if all your other
arguments stand up (which I doubt) I'm sure a claim would fall at the
oft-quoted hurdle of "... putting him in a position to work ...".
What hurdle is that? If you're alluding to a situation similar to that of
training expenses for the acquisition of new skills which could potentially
benefit the individual in a future employment or in a different
self-employed business, and would therefore fail the exclusivity
test in respect of the existing business (an argument which I accept could
be applied also to expense incurred on treatment to "get well" because
getting well also benefits the individual outside his business), then I
suggest the present case does not fit that template.

To illustrate, suppose the client has a lucrative contract coming up, but
his business is so small that he has no suitable employees available to
whom he could delegate the duties he would normally carry out himself in
connection with the contract. He's a builder and might have one or two
labourers on his books but no-one able to plan and oversee the work. If
he doesn't "get well soon", his business may lose the contract because
his customer might not be happy to wait until he gets better, and for
this reason it seems to me that any reasonable expense incurred in speeding
up his recovery to fitness (as distinct from expense incurred in merely
bringing his recovery about at all) would clearly have a W&E business
purpose.

The key distinction I'm making here is between "getting well" and
"getting well soon". The cost of getting well is zero (receiving treatment
on the NHS), the cost of getting well soon is non-zero (receiving treatment
privately). The fact that most if not all of the cost of private treatment
would be expended on the treatment itself (practitioner's fees), as opposed
to incidental costs (such as private hospital facility fees), is not really
relevant because the business decision is made on the basis of the bottom
line: Either take an enforced holiday, lose the contract, get well free,
or pay the money to get well soon and keep the contract.
 
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Medical expense

10% of salary are allowed as Medical expenses in India and if amount of said expense is higher then excess amount not realized
 
M

Mike Lewis

Ronald Raygun said:
This falls under the general principle of whether opting for a more
expensive solution than necessary is allowable. Another example might
be going somewhere by taxi when one could have taken the bus.

One could argue that going the NHS route would have involved waiting
longer to receive treatment, thus (a) prolonging one's suffering and
(b) delaying the chap's return to being fully fit to work again, thereby
making the case that the additional expense of the private route was
"necessary".

However, in the case of self-employment, the rule is that for an expense
to be allowable, it must have been incurred "wholly and exclusively" for
business reasons (and receiving medical treatment for a problem arising
from business duties fully meets that requirement). Because the
requirement
is *not* "wholly, exclusively, and necessarily", there is no need to make
a
case for the expense being necessary, it is allowable even if unnecessary.
www.hmrc.gov.uk/manuals/emanual/em32870.htm makes the disctinction on the
grounds of whether the injury is of vital importance to the trade but
trivial to the person. I doubt back pain can be considered to be trivial.
Overall I think it is far from clear that it is tax deductible.
 
R

Ronald Raygun

Mike said:
Send me on a wild goose chase why don't you? :)

Eventually found it at www.hmrc.gov.uk/manuals/eimanual/eim32870.htm
makes the disctinction on the
grounds of whether the injury is of vital importance to the trade but
trivial to the person. I doubt back pain can be considered to be trivial.
Actually I think that fits the present case rather well, since the
triviality test appears to hinge on whether the individual would have
chosen to spend the money.

Given that this is not the kind of treatment which is only available
by spending money, but which is available free of charge on the NHS,
and that therefore the individual is not faced with the choice of
whether to have the treatment or not, it should not be difficult to
argue that the individual would not have chosen to spend the money.

The expense is entirely associated with accelerating the treatment,
not with simply receiving it. It could be counter-argued that the
acceleration also benefits the individual privately, but I'd say
the private benefit is merely incidental. It's a bit woolly because
nobody can prove or disprove that the individual would or would not
have chosen to pay for acceleration himself. I dare say that if his
suffering was severe enough, he might have done, but on the other
hand if it was that bad, he might have been eligible for priority
even on the NHS.
Overall I think it is far from clear that it is tax deductible.
I'm glad you put it like that. Lack of clarity works both ways,
i.e. it is equally unclear that it is *not* deductible. :)
 
D

Dave

Thanks to you both for some very interesting reading.
At first I thought I was a little dense not to be able to make a confident
decision on this, based on some of the points you both put forward.
It really is a small amount involved, with basic rate tax but that's not the
real issue, it's getting the Return correct.
The client is a sole trader, a general builder. He hurt his back by lifting
bags of sand whilst at work. Prior to this he states that he had no back
problems.
After 2 weeks off work, with no pay and a risk of putting his contract in
jeopardy, he could not wait longer for his NHS hospital appointment and
therefore paid for treatment himself.
That's how it stands, and my initial view was that could he not have claimed
tax relief if he paid for private treatment whilst working on PAYE. He may
have received full sick pay or compensation, but that is irrelevant, it's
whether tax relief would be applicable.

However, the personal gain from early treatment would only bring him back to
the position he enjoyed before the injury incurred, and therefore could
reasonably be ignored. If we had machinery that had been damaged that was
essential to the business, we would not question "express" repairs.



So I am none the wiser and still have my other client who works in a circus
to deal with.......I should have been an estate agent.
 
S

Simon

Ronald Raygun said:
Send me on a wild goose chase why don't you? :)

Eventually found it at www.hmrc.gov.uk/manuals/eimanual/eim32870.htm


Actually I think that fits the present case rather well, since the
triviality test appears to hinge on whether the individual would have
chosen to spend the money.

Given that this is not the kind of treatment which is only available
by spending money, but which is available free of charge on the NHS,
and that therefore the individual is not faced with the choice of
whether to have the treatment or not, it should not be difficult to
argue that the individual would not have chosen to spend the money.

The expense is entirely associated with accelerating the treatment,
not with simply receiving it. It could be counter-argued that the
acceleration also benefits the individual privately, but I'd say
the private benefit is merely incidental. It's a bit woolly because
nobody can prove or disprove that the individual would or would not
have chosen to pay for acceleration himself. I dare say that if his
suffering was severe enough, he might have done, but on the other
hand if it was that bad, he might have been eligible for priority
even on the NHS.


I'm glad you put it like that. Lack of clarity works both ways,
i.e. it is equally unclear that it is *not* deductible. :)
Hi all,

Its taxable, its for health reasons, not business reasons but you knew I was
going to say that anyway.

The reason he had to pay for this was not a choice, osteopathic remedies are
not available on the NHS.

Simon
 
T

Tim

Hi all,

Its taxable, its for health reasons, not business reasons
but you knew I was going to say that anyway.

The reason he had to pay for this was not a choice,
osteopathic remedies are not available on the NHS.
Eh - are you sure?! :-

"... some [osteopaths] offer services through the NHS..."
http://www.osteopathy.org.uk/information/nhs-private-treatment/


Also see here:
http://www.nhs.uk/conditions/Osteopathy/Pages/Introduction.aspx


Simon - are the NHS & General Osteopathic Council's websites wrong?
 
P

Peter Saxton

One of my clients, a self-employed builder, used a private Osteopath to
treat him for back pain.
The amount involved is minimal £105.
He states that the back injury was caused during his building activities,
and that the Osteopath has advised that all such expenses are 100%
deductible.
For this claim I doubt if HMRC would be too bothered as all the other
details within the accounts are not questionable. My only real concern for
my client is where to enter the claim - Other expenses maybe?

The other issue that bother me slightly is that my client paid for treatment
when he could have used the NHS (?) How far might HMRC allow private medical
expenses to be claimed from sole traders?

( I also have a similar claim with a client who works abroad in a circus )

Would appreciate any guidance on this please.
Dave

Your client can't claim.

Martin is right in what he says.

Compare the situation with employees who can get health insurance to
be treated quicker. This is still taxable.
 
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D

Dave

Peter Saxton said:
Dave

Your client can't claim.

Martin is right in what he says.

Compare the situation with employees who can get health insurance to
be treated quicker. This is still taxable.
Hi Peter,

I have gone with your opinion, its the safest and most logical.
Spoke with the client, and advised that I do not treat medical conditions,
and I suspect his Osteopath did not spend 7 years to become an Accountant.
He seemed happpy enpough.

Have to thank you all again.

Dave
 

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