Motor and travelling

An anonymous subscriber disclosed [1] that they had been in protracted correspondence and a meeting with HMRC Lothians regarding the availability of motor/train travel between clinics for medical consultants.

The Revenue are quoting the cases of Jackman v Powell and Newsom v Robertson in support of their contentions, and seem to want to base their case on Horton v Young on the basis that the decision in that case cannot apply as the consultants are not, in the opinion of HMRC, itinerant workers.

The subscriber has argued that the position of the particular consultants should be distinguished on the basis that they have between 4 and 6 clinics, receive medical documentation/scans at their home offices, and make diagnostic decisions and send instructions back to clinics from the home offices.

In addition, because of the expense and technical nature of the equipment that is required to assess the patients, it is not commercially viable for the consultants to purchase these items, and they are therefore obliged to travel to clinics where others may undertake the procedure which they then review and discuss with the patient. The number of clinics visited is limited by the hours in the day and the availability of the equipment.

The inspector states that he has dealt with many similar cases, all of which the taxpayer has lost at the general commissioners. He refuses to accept that the consultant's home is his or her business base. He is seeking to disallow all travel from the home base to clinics, only allowing travel between private clinics. He stated that it would be a year before a case could be listed before the special commissioners, but only 4-6 weeks to obtain a hearing before the general commissioners.

Jason Sharp referred back to a fairly similar query 'Home as base of operations' [2] published on 7 March 2006 and I will refer to that later.

First of all I would like to comment on the inspector's statements about the commissioners. He may regard these as tactics, but another view is that they are threats and intimidation. Or he may be nervous about losing the case because the facts and law are against HMRC. Whatever the truth, they should be ignored by the subscriber, and if the case does go to appeal, why not ignore the inspector and make arrangements directly with the clerk to the commissioners?

The argument by HMRC about business travel seems to be surfacing more and more, and subscribers will note my comments in Newth Talks Tax published on 4 August 2008 – 'Subcontractors travel' [3]. The facts are quite different here, but the principles are the same. HMRC Business Income Manual at BIM37620 sets out the HMRC view about inter-site travel, and majors on the case of Horton v Young. However, only those points in the case favourable to HMRC, which incidentally the Revenue lost, are highlighted. It is understood that Revenue inspectors do not have access to the full judgments in such cases, only having access to those passages quoted in the manuals.

Horton v Young concerned a subcontract bricklayer who worked on a number of sites during his accounts year. He kept his books at home, took some business telephone calls and his wife provided some assistance. On those facts he was able to claim 'use of home for business purposes', and motor and travelling expenses from home to each site and back.

The crux of the current case is 'where is the business site?' One assumes that we are dealing with medical consultants engaged in their private practices, and that the clinics they visit where equipment is used are also private clinics. Even if the consultants used NHS equipment, for which they would have to pay a fee and room rent, the principle would be the same. Presumably medical files are kept at home, as well as scan results. It would help the case if a secretary also worked at the home address, and patients were seen there from time to time. Nevertheless, on the basis of Horton v Young, and unless the private practice was only part of a much wider professional appointment within the NHS, there is every indication that the home is the business base. Claims for use of home for business and motor and travel between home and clinics then follow.

The previous query on 7 March 2006 was very interesting, as the facts were very similar, and the consultant did not see patients at home. Nevertheless Carol Lawrence reported that, after a meeting with the inspector, the claims were allowed. In that case much of the work was done for medical insurance companies, with whom the contract was made. NHS regulations prevent business records being kept on hospital property.

The cases of Jackman v Powell (franchise milkman), Sargent v Barnes (dental locum) and Newsom v Robertson (barrister partly based at home but with rooms in London) are therefore irrelevant to the current case. Failing agreement after a review by the inspector's superior, I would go to appeal in this case (preferably the 'specials', but that may be too expensive).

Newth Talks Tax Archive [4]