Kirkwood (Inspector of Taxes) v Evans
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Patten,Mr Justice Patten |
| Judgment Date | 25 January 2002 |
| Neutral Citation | [2002] EWHC 30 (Ch) |
| Docket Number | Case No: CH/2001/App/010678 |
| Court | Chancery Division |
| Date | 25 January 2002 |
[2002] EWHC 30 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Honourable Mr Justice Patten
Case No: CH/2001/App/010678
Kate Selway (instructed by HM Inspector of Taxes for the Appellant)
The Respondent appeared in person
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Patten:
Introduction and background
This is an appeal by the Crown by way of case stated against a decision of the General Commissioners for the King's Lynn Division of 16 th July 200The Commissioners decided that the taxpayer, Mr. Keith Evans, was entitled to deduct for the purposes of determining his liability to income tax for the years of assessment 1997/8 and 1998/9 the expenses incurred by him in travelling to and from Leeds and of maintaining an office in part of his home in King's Lynn.
The facts as found by the Commissioners are set out in paragraphs 5 and 6 of the Case Stated as follows:
"(a) Mr. Evans is a Civil Servant who works for the Central Adjudication Services which is an Executive Office of the Department of Social Security.
He worked in King's Lynn until June 1990 and was then employed on detached duty terms at Southampton. By June 1991, due to insufficient further suitable volunteers to go to Southampton, it was decided to transfer the work to Leeds. Mr. Evans then had the option of moving house with financial assistance from his employer but his family circumstances dictated that he continued to live in King's Lynn, so he travelled to and from Leeds and stayed there overnight two or three times a week.
(b) For the first five years of working in Leeds, Mr. Evans received an allowance from his employer towards his travelling and subsistence costs.
(c) A few months before that five-year period came to an end, the employer introduced a Homeworking scheme, giving employees the option to work from home.
(d) When the five year period ended in June 1996, Mr. Evans decided to continue with his present job in Leeds and to work from home, rather than seek an alternative job nearer King's Lynn.
(e) Mr. Evans then travelled the 135 miles each way journey to Leeds once a week. Under the terms of the employer's Homeworking scheme, Mr. Evans did not receive any financial assistance towards his travel costs, or towards the cost of using part of his home as an office.
Mr. Evans' involvement in the Homeworking Scheme ended on 25 th March 1999.
(f) Mr. Evans made a claim for the expenses of travelling to Leeds, and for the use of part of his home as an office for the year 1996/7. That claim was contested by the Inland Revenue and the matter was heard by the General Commissioners for the Division of King's Lynn on 18 th January 2000, when Mr. Evans' claim was upheld.
(g) Since then, Mr. Evans has completed Tax Returns for the years 1997/98 and 1998/99 and has claimed similar expenses for those years in the amounts of £4,153.00 and £3,874.00 respectively.
The Inland Revenue made enquiries into both those Returns which resulted in Revenue Amendments being made to Mr. Evans' self-assessments to disallow the claim for expenses.
Mr. Evans has appealed against those amendments.
6. In addition to the facts agreed by the parties, and as a result of oral evidence and documentary evidence adduced before us, we found, as a fact, that the Respondent had two places of work, one his home in King's Lynn and the other at his employer's office in Leeds. We found that his home in King's Lynn was his permanent place of work. For the avoidance of any doubt, we did not find that the Leeds office was his permanent place of work."
The facts summarised in paragraph 5 were contained in an agreed statement of facts submitted to the Commissioners by the parties. In addition Mr. Evans submitted to the Commissioners that the adoption of the Homeworking scheme had enabled his employers, the CAS, to rationalise their office accommodation in Leeds by freeing much needed space for other employees. Once an employee like the taxpayer opted for the Homeworking scheme he lost his office allocation in Leeds and was therefore required to provide his own office facilities at home. The change in working procedures effected by the scheme is not however irreversible. Either the employer or the Defendant may terminate the Homeworking agreement on giving one month's notice in which case the employee will be re-accommodated in Leeds. The scheme is an option available to approved employees. It is not compulsory. This is made clear by the CAS policy statement on homeworking which says this:
"1. Homeworking is an arrangement where full and part-time staff, with the agreement of management, have their home as their main work place. This principle is wholly endorsed by the CAS Management Board.
2. Homeworking can be an effective way of discharging CAS business. Homeworking supports CAS's equal opportunities policies. It acknowledges that staff have varying family or other responsibilities. Also, Homeworking can enhance individual contributions to CAS's work in general.
3. Homeworking is potentially available to any member of staff. However, no one is obliged to participate in the scheme and some may find that it does not suit them. Agreement to commence Homeworking must be endorsed by line managers and approved by the Grade 7 who may refuse a request where any individual member of staff is felt to be unsuitable; where it is not practicable for an individual to undertake a particular range of work at home, where business needs would not be met; related resources are not available, or where health and safety considerations are not met.
4. Staff who work from home on an ad hoc or regular basis (say one or two days a week) are not regarded as Homeworkers for the purpose of this policy statement. Existing flexible arrangements will operate through agreement with line managers."
If the CAS agrees to an employee working at home it provides him with the necessary equipment including a suitable PC which remains the property of the CAS. The specified requirements of the Homeworking scheme deal, inter alia, with the accommodation which the employee needs to have at home and the arrangements which can be made for forwarding to him post. These are set out in paragraphs 2.1 and 2.6 of the printed scheme in the following terms:
"2.1 It is not essential to have a separate room to work in but for reasons of security and health and safety – apart from personal convenience – it may be best to use one particular room, perhaps a spare bedroom, which could double as an office or a workstation. If it is not practicable to use a separate room, it is desirable to have a designated work area, which will be the working environment, with equipment ready for use.
2.6 The main options are:
• Post being forwarded from the office;
• Collecting post on days in the office;
• The use of Fax for urgent material."
Mr. Evans told me that he had agreed with the CAS that he would attend their offices in Leeds once a week in order to deliver the work which he had done and to collect new work for the forthcoming week. Whilst there he could also download information from a database via a PC with a modem which was not a facility he had at home. He would be available to work in Leeds for the remainder of that day.
Travel expenses
In order to be an allowable expense under Schedule E the cost of travelling to and from Leeds claimed by the taxpayer in this case must satisfy the conditions specified in s.198(1) of the Income and Corporation Taxes Act 1988. This provides that:
"198. (1) If the holder of an office or employment is necessarily obliged to incur and defray out of the emoluments of that office or employment the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform those duties, or otherwise expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."
For the year of assessment 1998/9 these provisions have been amended so as to read as follows:
"198. (1) If the holder of an office or employment is obliged to incur and defray out of the emoluments of the office or employment -
(a) qualifying travelling expenses, or
(b) any amount (other than qualifying travelling expenses) expended wholly, exclusively and necessarily in the performance of the duties of the office or employment,
there may be deducted from the emoluments to be assessed the amount so incurred and defrayed.
(1A) "Qualifying travelling expenses" means-
(a) amounts necessarily expended on travelling in the performance of the duties of the office or employment, or
(b) other expenses of travelling which-
(i) are attributable to the necessary attendance at any place of the holder of the office or employment in the performance of the duties of the office or employment, and
(ii) are not expenses of ordinary commuting or private travel.
What is ordinary commuting or private travel for this purpose is defined in Schedule 12A."
"Ordinary commuting" in s.198 (1A)(b)(ii) is defined in Schedule 12A to the 1988 Act. The relevant parts of that schedule provide as follows:
"2(1) "Ordinary commuting" means travel between-
(a) the employee's home, or
(b) a place that is not a workplace in relation to the employment,
and a place which is a permanent workplace in relation to the
employment.
(2) "Private travel" means travel between-
(a) the employee's home and a place that is not a workplace...
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