Training Costs : HMRC v Banerjee

Expenses for self-employed – any expenses must be incurred ‘wholly and exclusively for the purposes of the trade or profession’.

Expenses for employees – the restrictions for expenses that can be claimed by an employee are much stricter.  For an expense to be allowable it must be incurred, ‘wholly, exclusively and necessarily in the performance of their duties of employment’.

Traditionally the types of expenses that an employee can claim for have been restricted to fees paid to professional bodies, personal tools that the employer requires the employee to provide and business travel.

However, in the case, HMRC Vs Banerjee, a former registrar, successfully applied for and claimed a tax refund for courses and training costs which she had paid for personally. Prior to this case this type of expense had been disallowed when claimed by a surgeon as the courts had argued that the expense was not incurred ‘in the performance of his duties of employment’; those duties of employment being to provide care to the sick.

HMRC have now provided additional guidance in their manual EIM32530, regarding the circumstances and requirements which need to exist for claiming training costs.

If you think that you may be eligible to make a claim for training costs incurred in the last 4 years, we recommend that you first read this guidance provided by HMRC.

You will see from this guidance that there are a number of pre-requisites required for making a successful claim:

  • There is a mandatory requirement for the employee to undertake the external training as an intrinsic part of the duties of the employment and,
  • Failure to complete the training and obtain the qualification will mean that the employee will not be able to continue in employment with the employer in the role that would otherwise have been available to them after qualification.
  • Any personal benefit incurred from the course, unlike most CPE courses, would be incidental and not therefore give rise to a dual purpose of the expenditure.

Some professional medical bodies are suggesting that their members may be able to claim the exam fees. This particular matter was not dealt with in the Banerjee case and it is uncertain whether HMRC will extend tax relief to cover exam fees.


The Revenue are reluctant to give tax relief on training expenses incurred based on one case which in many instances appears to contradict earlier legal decisions.

We are currently waiting for a response for a number of claims we have submitted for our clients based on this Banerjee case.


It is possible to make a tax rebate claim up to four years in arrears. If the training expenses you have incurred include expenses going back four years, you may wish to make a claim now so that you do not miss the deadline.


We often provide a pro-forma letter for claiming tax relief on course fees for our clients to complete and submit to HMRC themselves.

NOTE OF CAUTION – When a claim of this nature is submitted to the Revenue this automatically leads the Revenue to review the PAYE deducted in earlier years.  If, therefore, you have changed jobs at any time in the previous tax years or if your employer has operated an incorrect tax code for you, as is often the case, then it is possible for a taxpayer to find themselves with an additional tax liability rather than a tax refund.

If you are not completely sure that the Revenue have already reviewed the earlier years then we strongly advise against submitting a claim of this nature without first asking us to calculate if there is any underpayment that you are not aware of.

You will know that the Revenue have looked into an earlier year if they have sent you a form P800 or a claim for payment or refund for a particular year.