Any update on Horton v Young (1971)?
HMRC recently launched an enquiry into a couple of self employed construction Industry (CI) subcontractor client of mine. We are in agreement with all the expenses with the exception of the travel. They are arguing that it can only be claimed if it's from site to site not from home to site. They argue that even thou the subcontractor changes site frequently, he is not an "itinerant" trader. They sited Horton v Young [1971] 47TC 60 as precedence. In addition, their BIM37620 seems to capture this quite well. (BIM 37605 also makes interesting reading).
I deal with a number of CI clients and in 13 years I have not have this challenged. I don’t think any other Inspector knows or applies this ruling.
The questions are: has this ruling be superseded? Have skilled and semi skilled workers in CI been subsequently reclassified as "itinerant" traders? Base of operations is their homes.
Any help will be greatly appreciated.
Thanks
Hakeem
Hakeem Adeleye
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In BIM 37935 it advises Inspectors to disallow a traders home to work travel costs unless the trader is an "itinerant" trader.
In BIM37620 an intenerant trader is one who travels from home to a number of different locations. Brightman J advises there is a fundamental difference between a shopkeeper who travel from home to shop and a self employed persons who travels to a location, does a job and then moves on. Whether the stay was 2 hours or 3 weeks what was importat was the nature of their t rade which gave the roles its itinerant nature.
In 2004 I had a similar query about travel. My answer was....
" You mention travel in your letter. At IM3122 for subcontractors it covers this point where it states...........
In view of the decision in Horton v Young (47 TC 60) where a subcontractor works at two or more different sites during a year travelling expenses between the taxpayer’s home and those sites should normally be allowed."
I think that this quote was most useful in putting my query into touch.
note that the Inspectors Manual has now been withdrawn. Paragraph 3122 dealt with travelling and subsistence expenses of sub-contractors.
BIM37620 also says that where the traders base of operations is their residence travel to site should be allowed. An example of a jobbing builder is given which fits in nicely to many CIS trades.
The nature and place of the subcontractors business would be important It woul dbe useful to confirn t was th ehome. Some clients could have substantial and significant duties which are performed at home, but which can vary in time, quantity and quality from client to client. We would, however, wish to remind HMRC that Brightman J in Horton v Young said that it was perfectly possible to have minimal duties performed at the home and it could still qualify as a place of business.