If you are self employed and work from home – you may need to review your mileage claims following a decision from HM Revenue and Customs (HMRC).
A self employed doctor lost his battle with HMRC over mileage claims between his home office and other places of business. The decision impacts on any self employed person based at home.
The doctor concerned, Dr Samadian, was an employee for two NHS hospitals and was also a self employed consultant for two private hospitals. He had an office at home. HMRC challenged the mileage claim in his annual tax returns, which included claims for journeys he made on a regular basis between NHS and private hospitals and between his home office and the private hospitals.
Both the First Tier Tribunal and the Upper Tribunal agreed with HMRC in concluding that the travel between the NHS hospital and the private hospitals is not tax allowable as the journey was not necessitated by Dr Samadian’s self employment.
In addition, it was decided that travel between his home office and the private hospitals is not allowable.
The reasoning was consistent with other case law in that the journey had dual purpose, part of which allowed Dr Samadian to leave/return to his home.
It should be mentioned that at no stage was there a challenge to whether Dr Samadian genuinely worked from home.
He used his home office to book appointments, to write reports and to store patient records.
Indeed, the tribunals agreed that his travel to and from his home to places where he undertook work on an irregular basis, for example a patient’s home, was allowable.
As mentioned, the decision is not one that relates solely to doctors.
Subsequent to Dr Samadian’s case, HMRC took, and won, another case involving a flying instructor.
In his case, tax relief was denied on travel from home office to the two airports at which he regularly gave flying lessons.
So what conclusions can be drawn from the recent decisions?
It would appear that, to get tax relief on travel costs, the taxpayer will need to be travelling from home to an irregular or temporary workplace.
Where the journey is regular or predictable then the travel to such workplaces and home is likely to be disallowed.
Anyone uncertain about how to proceed should seek advice from their accountant.