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May 2013

Contemplating Taking a Spouse on a Business Trip - Think Carefully!

Andrew Bell

When Mr Trembath, Director of Trembath & Co. Ltd., flew his wife (also a director of the company) to join him on a business trip in Australia, combining business meetings with visiting relatives, he didn't realise the grief he was going to land them in. When the couple filed the wife's expenses as tax deductible they found themselves facing the Tax Inspector in court!

Misinterpreting tax rules is easily done, and easily avoided, and getting it right can ensure a trip doesn't turn into a financial nightmare. Andrew Bell, Corporate Tax Manager of Hall Morrice Chartered Accountants, concurs, "Simple mistakes may come back to haunt you, causing personal stress and reputational damage, so here we explain how you can make the most of the foreign trips on offer to you."

The forthcoming 44th annual Offshore Technology Conference will be held in Houston from 6-9 May 2013 and over 80,000 delegates are expected to fly in from across the globe to attend this international event. It's a tempting proposition. A conference in a great location - sharing knowledge and illustrating the latest industry developments - but it's also a potential opportunity to explore Texas - sun, the Galveston sea, ranches in Bandera, great music in Gruene, history in San Antonio and the unique atmosphere of Austin. But should a spouse accompany a delegate, and are the partner's costs tax deductible?

Andrew Bell of Hall Morrice acknowledges that, "Some employers regard it as being in their interests to encourage staff to be accompanied by their spouses on business trips. Employers who operate such a policy will usually pay or reimburse the partner's expenses. Those expenses will be assessable as general earnings but it's important to clarify whether a deduction is due before embarking on the trip. To obtain a deduction an individual must show that the expense of taking a spouse was necessarily incurred in the performance of work duties and there are some key questions to ask."

Evaluate if the spouse has a special skill or qualification associated with the employee's job that is needed on the trip, although not necessarily full time. A good example is a partner acting as an interpreter abroad at business meetings.

Is the presence of a spouse essential to hosting a series of business entertaining occasions? Bear in mind that it's not enough that a couple simply attend functions where other guests are accompanied by their spouses.

Is an employee's health so poor that it would be unreasonable to travel alone?

Andrew Bell adds, "It's also legitimate to ask, in the spouse's absence, would somebody else be required to accompany the employee to enable them to carry out their duties? If the answer is yes, then there may be a legitimate claim - in this case it's important that the deduction should be supported by records. If the answer is no then bills associated with a partner's travel should be personally covered.

"Even if a spouse's expenses aren't tax deductible a conference delegate is still in a financially positive situation - if a company pays for an employee's flight, hotel and meals then that is a saving from the outset."

So for those contemplating taking friends and family to OTC in May think carefully about whether it's a personal expense or a professional one, get your work delivered, and then focus on enjoying your holiday.

Hall Morrice can offer practical advice and assistance regarding tax deductible travel, as well as a wide range of financial guidance in accounts, audit, business advisory, corporate finance and taxation services.

Hall Morrice, founded in 1976, is one of Scotland's leading independent firms of chartered accountants and has offices in both Aberdeen and Fraserburgh. Based at 6 & 7 Queen's Terrace in Aberdeen, Hall Morrice can be contacted on 01224 647394 or at

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