Contractors' Questions: Any advice now that Dr Samadian isn’t appealing?

Contractor’s Question: Having heard from a trusted and well-placed source that Dr Samadian has chosen not to launch a further appeal, what are the lessons for other self-employed people deducting travel expenses? I’ve read the first and second comment pieces ContractorUK has published on the defeat for the taxpayer, but I’d now like some concise expenses advice on the implications for other self-employed consultants.

Expert’s Answer: The Upper Tribunal, which in January dismissed Dr Samadian’s appeal and found the First Tier Tribunal decision to be essentially correct, has provided guidance to support its decision. The guidance, which provides advice going forward, takes the form of four main points:

  • travel expenses for journeys between places of business for purely business purposes are treated as deductible;
  • travel expenses for journeys between a location which is not a place of business and a location which is a place of business are not deductible;
  • travel expenses for journeys between home (even where the home is used as a place of business) and places of business are treated as non-deductible. This is the case other than in very exceptional circumstances (such as if Dr Samadian were at one of the private hospitals preparing to see a patient, and he realised that he needed his notes on the patient but he had left the notes in his office at home and he made a special trip to go home to collect the notes, but immediately returned to the hospital to see the patient);
  • travel expenses are treated as deductible in relation to itinerant work (such as Dr Samadian's home visits to patients).

The key issue seems to be whether a journey is habitual or itinerant, and this judgement will need to be made on a journey by journey basis. For tax advisers and accountants, this means they will need to impress upon their clients that it is vital to keep robust records of all business journeys undertaken. 

The Expert’s Answer is based on commentary from the ACCA (Association of Chartered Certified Accountants).

Monday 9th June 2014