Ruling against claiming accommodation costs Ruling against claiming accommodation costs
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  1. #1

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    Default Ruling against claiming accommodation costs

    This is an interesting ruling, that all should be aware of - especially those that opt to move closer to better paying work.

    Contractor’s home to hotel travel disallowed | AccountingWEB

    A Scottish contractor, who lodged in Swindon to be available for work in the south of England, had his travel and accommodation expenses disallowed as not wholly and exclusively incurred for his business.

    Taylor claimed the expenses between his home in Melrose, Scotland and a hotel in Swindon in his 2016/17 tax return.


    HMRC opened an enquiry into Taylor’s 2016/17 return in April 2018 and requested a breakdown of Taylor’s expenses claims. In November 2018, HMRC issued a closure notice and a penalty notice for £1,015.96 and £1,115.35 respectively. This was later reduced to nil.


    The closure notice disallowed much of the taxpayer’s expenses claims on the basis that they were not incurred wholly and exclusively for the purposes of his trade. The penalty was assessed based on careless behaviour.

    The FTT agreed with HMRC’s interpretation: the main reasons Taylor chose to stay in Swindon were to improve his chances of obtaining better rates of remuneration and to reduce the journey time from his home in Melrose to his place(s) of work.

    As the FTT put it, it was not as if Taylor was unable to live and work in Melrose. His situation was little different from a taxpayer choosing to stay in a hotel closer to their workplace during the week so that they could spend longer at home, eg to help with childcare or to catch a later train, and then claiming those hotel expenses against their income.

    Full details on Bailii.org ref TC07893 (link to the PDF in the article)

  2. #2

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    You miss the important bit (for us)

    HMRC did concede that if the taxpayer had travelled to Swindon for a specific contract, then his travel and accommodation costs for that contract would have been deductible. However, this is not what happened in this case.
    In effect by deciding to live in Swindon while working on multiple contracts he made Swindon his home (poor sod).

    Not that it actually matters as for most people come April thanks to IR35 expenses will be a thing of the past.
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    He was also self-employed so that's worth noting too

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    Quote Originally Posted by vwdan View Post
    He was also self-employed so that's worth noting too
    That actually wouldn't make any difference (HMRC's expenses policy is global) - it's the single contract bit that is all important..
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    Quote Originally Posted by eek View Post
    You miss the important bit (for us)



    In effect by deciding to live in Swindon while working on multiple contracts he made Swindon his home (poor sod).

    Not that it actually matters as for most people come April thanks to IR35 expenses will be a thing of the past.
    We've had multiple posts about contractors doing exactly this in the past and the advice we've always given is it's not deductable. Pretty straightforward stuff IMO.

    I do believe they were posted in the accounting section though
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    Quote Originally Posted by northernladuk View Post

    I do believe they were posted in the accounting section though
    What part of a legal case against an accounting mistake gave you that idea?
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    Quote Originally Posted by eek View Post
    You miss the important bit (for us)



    In effect by deciding to live in Swindon while working on multiple contracts he made Swindon his home (poor sod).

    Not that it actually matters as for most people come April thanks to IR35 expenses will be a thing of the past.
    Yeah, I was thinking more along the lines of people moving for similar reasons to the scenario in the case as I can see that some people would do that. Moving for a specific piece of work is a slightly different use case.

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    And, yes, I should have put this in the Accounting section. I didn't realise I was in the wrong forum until it was too late.

    Happy for a mod to move it.

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