Jones
| Jurisdiction | UK Non-devolved |
| Judgment Date | 01 October 2015 |
| Neutral Citation | [2015] UKFTT 477 (TC) |
| Date | 01 October 2015 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Zachary Citron, Mrs Shameem Akhtar
Mr David J Wright, FCA, FCCA, of DWA Accountants, appeared for the Appellant
Mr Simon Bates, Officer of HMRC, appeared for the Respondents
Income tax – Travel expenses – Self-employed consultant anaesthetist in private practice making journeys from home (where he had an office) to hospitals where he carried out his professional duties – Whether expenses incurred wholly and exclusively for the purposes of his self-employment – Income Tax (Trading and Other Income) Act 2005 (“ITTOIA 2005”), s. 34(1) – Samadian [2013] TC 02533 and Samadian v R & C Commrs [2014] BTC 504 considered – Appeal dismissed.
The First-tier Tribunal (FTT) dismissed a taxpayer's appeal against HMRC's decision to disallow his travel costs between his home, where he maintained an office, and hospitals where he performed duties as a self-employed anaesthetist. The FTT found that although hypothetically, given the taxpayer's position as a subcontractor to surgeons, his attendance at the hospitals may not have been “regular and predictable”, in reality such a pattern was clear, the hospitals were therefore places of business and, in accordance with well established case law, the travel costs between his home and the hospitals were not deductible as they were not incurred wholly and exclusively for the purposes of the business.
Dr Jones (the appellant), was a self-employed consultant anaesthetist in private practice. He was also employed as a consultant anaesthetist by Gwent Healthcare NHS Trust. In his private practice the appellant travelled from his home, where he carried out the administration and management of his private practice, to hospitals where he performed duties at surgical operations. The issue in the appeal was whether the expenses of these journeys from home/office to hospital and back again, were incurred wholly and exclusively for the purposes of the appellant's self-employed private practice (the “wholly and exclusively” test in the ITTOIA 2005, s. 34(1)).
The appellant's private practice involved him working with an operating team brought together by the surgeon in charge of the operation in question, with the surgeon offering the appellant work and the surgeon controlling the timing and location of the surgery, financial matters and arrangements with the hospital. The appellant could either accept or refuse the offer of work from a surgeon. In the year in question the appellant only travelled between home and two hospitals (St Josephs and the Royal Gwent) as part of his work as a self-employed anaesthetist.
The FTT noted the similarities between this case and that of the consultant geriatrician in the FTT decision of Samadian TAX[2013] TC 02533, upheld in the UT in Samadian v R & C Commrs TAX[2014] BTC 504. The FTT in this case succinctly summarised the principal relevant case law reviewed by the FTT in Samadian.
The appellant argued that his case was akin to that of the bricklayer in Horton v Young TAX(1971) 47 TC 60, which is the only case to have held that travel expenses of journeys from and to a taxpayer's home were deductible. In that case Mr Horton had entered into contracts (at his home) with a builder for work on a number of widely separated sites and it was decided that Mr Horton's home was his only place of business as the sites he worked on were not fixed or regular and there was no predictability about where Mr Horton worked.
The FTT referred to the Samadian UT decision in which it set out “sensible and coherent categories for treating travel expenses as deductible or non-deductible”, noting that travel expenses for journeys between a person's home (even where the home is used as a place of business) and a place of business are non-deductible other than in very exceptional circumstances (such as if a medical practitioner is at a hospital preparing to see a patient, he realises he needs his notes on the patient which are located in his office at home so he makes a special trip to go home to collect the notes, and immediately returns to the hospital to see the patient). The FTT found that in this case there were no such “very exceptional circumstances”.
The FTT considered whether the two hospitals the appellant visited were places of business for the appellant. The FTT asked if there was a pattern of regular and predictable attendance to carry out significant professional functions as more than just a visitor and found that there was. In the FTT's view, on the point that the appellant was in effect a “subcontractor”, in relation to his instructing surgeons, potentially militated against a pattern of fixed and regular attendance at particular locations, and if such a scenario came to pass, the appellant might well not have satisfied the criterion of having a pattern of regular and predictable attendance at any particular location, the reality however was that in the year in question the appellant travelled from his home to only two hospitals which strongly indicated a pattern of regular and predictable attendance and even though there was a range in the number of days between operations this did not change the pattern.
The FTT concluded that although the UT's “sensible and coherent categories” were a valuable tool, their analysis had to come back to the statutory test itself. In the FTT's view, the appellant's journeys between his home and the two hospitals in the year in question were within the remit of well-established case law that part of the purpose of such journeys was to enable the taxpayer to live away from his work. Hence the associated travel expenses were not incurred wholly and exclusively for the purposes of the appellant's private practice and the appeal was dismissed.
Although the FTT referred to the summary of categories for treating travel expenses as deductible or non-deductible as set out by the UT in Samadian, the FTT found that based on established case law the appellant's journeys were in part to enable him to live away from his work and therefore the travel expenses between his place of work at home and places of work at hospitals were non-allowable.
[1] The appellant, a consultant anaesthetist in private practice, travelled by car and motorcycle from his home, where he also maintained an office, to hospitals where he performed duties at surgical operations. The issue in the appeal was whether the expenses of these journeys from home/office to hospital and back again, were incurred wholly and exclusively for the purposes of the appellant's self-employed private practice.
[2] The appellant's accounts for the year ended 31 August 2008, upon which the self employment schedule to his 2008–09 tax return was based, showed motoring expenses of £7,327 and other expenses of £6,013, making for total expenses of £13,340. The motoring expenses comprised the expenses of journeys from the appellant's home to hospitals at which he took part in surgical operations; from those hospitals to his home; and between those hospitals.
[3] HMRC took the view that, of the appellant's motoring expenses, only the expenses of the journeys between hospitals were properly deductible for income tax purposes. Using a mileage log provided by the appellant, HMRC calculated (in a letter to the appellant dated 15 September 2010) that the expenses of journeys between hospitals in the year amounted to £775. Accordingly, £6,552 (the remainder of the travelling expenses) was, in HMRC's view, to be disallowed.
[4] For the tax years 2009–10 and 2010–11, the appellant claimed total expenses of £12,734 and £13,317 respectively, but did not provide an analysis of his motoring expenses from within these totals. HMRC therefore calculated the proportion of the appellant's total expenses that were disallowed for 2008–09, the year for which the appellant's mileage log was available (being £6,552 of £13,340, or 49%), and disallowed the same proportion of the appellant's total expenses for 2009–10 and 2010–11, taking the view that this was the best estimate that could be made on the basis of the information available.
[5] A closure notice for 2008–09 and notices of assessment for 2009–10 and 2010–11, in each case reflecting HMRC's views as described above, were issued to the appellant on 26 November 2012. The appellant appealed against the assessments by letter to HMRC dated 30 November 2012. The appellant accepted an offer of a review by HMRC. That review concluded with a letter from HMRC dated 27 February 2013, in which restrictions to the amounts claimed for travelling expenses in each of the years 2008–09, 2009–10 and 2010–11 were upheld. The amounts at issue were:
Year |
Expense disallowed |
Tax & NIC due |
2008–09 |
£6,552 |
£2,686.32 |
2009–10 |
£6,239 |
£2,557.99 |
2010–11 |
£6,525 |
£2,675.25 |
Total tax in dispute |
£7,919.56 |
[6] The appellant submitted a notice of appeal dated 27 March 2013.
[7] By direction of the First-tier Tribunal, Tax Chamber (“FTT”) dated 31 May 2013, the appeal was stood over pending the decision of the Upper Tribunal, Tax & Chancery Chamber (“UT”) in Samadian v R & C Commrs TAX[2014] BTC 504.
[8] We note that HMRC stated in its statement of case and skeleton argument that its acceptance of the deductibility of the appellant's travel expenses for journeys between hospitals reflected its views prior to the decision in Samadian in so far as such travel was between the appellant's place of employment (the Royal Gwent Hospital) and hospitals where he carried out his private practice.
[9] We received a documents bundle with copies of the relevant tax returns and assessments, of the appeal, and of correspondence between the appellant and HMRC between 2010 and 2014.
[10] The appellant neither provided a witness statement nor attended the hearing (Mr Wright, representing the appellant, explained that he was attending a surgery on the hearing date, and this had been arranged some time in advance). This did not, however, cause any...
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