SPC00531

INCOME TAX: ALLOWABLE EXPENDITURE Sch D: interest payments on a commercial mortgage- was the purpose of the mortgage to purchase just business assets or to purchase a private  dwelling house as well – a question of fact – the purpose of the mortgage was to buy a parcel of assets with a mixed business and private use – the interest payments apportioned to reflect the mixed use – the appropriate rate of apportionment 35/65 private and business use based on the finding that the mortgage was to facilitate the purchase of the entire business assets plus the dwelling rather than the purchase of two properties – decision in principle to allow the Appeal in part but only in so far as substituting 35 per cent for the 50 per cent add back in respect of the interest – parties directed to agree computations in order to make final determination. Final Determination

THE SPECIAL COMMISSIONERS

	IAN DIXON	Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Special Commissioner:  MICHAEL TILDESLEY OBE

Sitting in public in Edinburgh on 29 September 2005

James Paterson, Chartered Accountant for the Appellant 

June Kennerley of the Northern England Regional Appeals Unit HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION
The Appeal
1.	The Appellant was appealing against amendments to his tax returns for 2000/01 and 2001/02, and against discovery assessments for 1996/97, 1997/98, 1998/99 and 1999/2000. In their amendments and discovery assessments the Respondents reduced the amount of mortgage interest by 50 per cent which the Appellant had claimed for business expenditure. 

2.	On 24 November 2005 my decision in principle was released which was:

“I have allowed in part the Appellant’s appeals against the amendments to his tax returns for 2000/01 and 2001/02, and the assessments for 1996/97, 1997/98, 1998/99 and 1999/2000 but only in so far as substituting 35 per cent for 50 per cent of the interest added back to the amendments and assessments in question”.
3.	I directed that the Respondents produce the necessary computations and agree them with the Appellant’s representative within two months from the date of release of this decision. 

4.	The parties have agreed the necessary computations. I, therefore, determine that the following in accordance with the parties’ agreement:

Year	Amount of Self-Assessment (Tax and Class 4) (£)	
1996/97	1686.90	
1997/98	3225.27	
1998/99	2803.62	
1999/00	3886.94	
2000/01	3339.94	
2001/02	4279.55	

MICHAEL TILDESLEY OBE
SPECIAL COMMISSIONER
RELEASE DATE: 30 March 2006

SC 3082/050