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Business Matters

Expense Claims

A recent tax case at the First tier tax tribunal made some interesting points which could have wide impact on practical expense claims for both employees and the self employed.

The facts of the case were that a nurse who worked for several hospitals and care homes had claimed expenses not reimbursed by his employers, against his earnings on his tax returns over a period of 6 years. The expenses claimed included travel and subsistence, laundry of uniforms, use of his home as an office and further training for himself.

Two - maybe three - principles were confirmed by the tribunal:

Claiming more than the standard allowance requires the tax payer to have receipts for the expenses incurred, even although HMRC agreed that the expenses were valid and in principle deductible from earnings.

Travel, if allowable, required the nurse to have kept records of the journeys undertaken and the purpose of those journeys. The tribunal said that commuting from home to the place of work was NOT allowable.

I think everyone knows that they SHOULD keep a mileage record if they wish to claim mileage and deduct it from earnings whether as an employee or as a self employed individual. Many probably don't in practice.

Many many self employed people work from home OR claim use of residence costs. Neither of these facts are at issue here, the underlying issue is whether when you travel from your home to your place of work, that that is business travel (which is allowable for tax) or is ordinary commuting (getting to your place of work). An example may make this simpler to understand.

A sole trader operates a take-away restaurant in Hamilton but lives in Blantyre - a distance each way of between 5 and 7 miles. Her place of work is Hamilton even although she may do her bookkeeping, research new recipes and do other work related activities at home. In this situation, it is her decision to live away from her place of work and the 5-7 miles per day is NOT Tax deductible. A trader's place of work is where the customers come to (or where they are, if it is the trader who travels).

This principle was established back in 1952 in the Newsom vs Robertson case and is not new.

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