Introduction »

Tortuous travel…

Over recent years the issue of the self-employed individual claiming tax relief on travel expenses has been a constant area of challenge by HMRC. This is particularly the case where the individual undertakes both work at home and is considered to have another business base. A recent case won by HMRC illustrates that this is very much a live issue, particularly for the self-employed professional.

The taxpayer, a medical professional, has so far suffered a 7 year enquiry from HMRC and 3 Tribunal hearings over his business mileage claims. The Tribunal accepted that the taxpayer has a dedicated office in his home which is necessary for his professional activity. However, it did not accept that home should be treated as the starting point for calculating business mileage for regular and habitual journeys in connection with his private practice work.

The facts

The taxpayer specialises in the healthcare of elderly people and is employed at two hospitals in South London. Additionally, he holds weekly outpatient sessions at two private hospitals. He maintained that his headed paper showed his home as the correspondence address and that paperwork was sent to him there by health insurance companies. Emails were accessed at home as well.

He would generally undertake a fact finding consultation at either the patients home or at the private hospitals where he would hire a consulting room. Following the consultation he would prepare a treatment plan in his home office and would continue to monitor and care for the patient. Patients were not examined in his home office.

The issues

HMRC enquired into the taxpayer’s typical weekly journeys to support his 65% business mileage claim. Two regular journeys were identified by HMRC:

• the mileage between the NHS hospitals and the private hospitals and
• the mileage from home to the private hospitals.

HMRC sought to disallow these as business journeys and proposed to reduce his business mileage claim to 6%.

The taxpayer’s argument was that the business base should be regarded as where the business was run and not the place where the professional services were carried out. He stated that his home was clearly the business base so there was no non-business purpose in the travel between the home and the private hospitals.

HMRC argued that travel to and from home and a place of work is not generally tax allowable, because the journey cannot be regarded as wholly and exclusively for business. The travel was not to various temporary sites as he was delivering his professional services at fixed sites on a regular basis.

As indicated earlier, although the Tribunal did accept that the taxpayer had a place of business at his home they considered that the travel from home to the private hospitals was not wholly and exclusively for business purposes. Rather, there was a dual purpose to the journeys as part of the object of the journeys must have been to maintain a home in a separate location from the private hospitals. The journeys between the NHS hospitals and the private hospitals were also regarded as not allowable on the basis that the object of the journey was to put the taxpayer into a place where he could carry on his business away from his place of employment. As a result, the travel was not an integral part of the business itself.

If you are concerned that the decision in this case could affect your claims for business mileage, please contact us for further advice.

Introduction »