Travel and subsistence in the building trade. By Rebecca Benneyworth

Posted by AccountingWEB PM | on Fri, 02/02/2007 - 11:36 13489 4 comments

What travel and subsistence expenses can be paid in the building trade without incurring a tax liability? Are there any other consequences of reimbursing travel costs?

Travel and subsistence expenses paid to the self employed
Where travel is paid for in respect of journeys of self employed subcontractors the amounts paid will be part of the taxable income of the worker, who will then set his own travel costs off against it if appropriate in his profit computation.

Continued...

Employee's travel - Different Sites

Malcolm Veall | Tue, 06/02/2007 - 12:23 | Permalink

Rebecca,

You quite rightly say that there is no specific guidance on how near sites have to be to qualify as the same site.

The test is whether the employee's journey is "substantially different", (itepa s339(7)).

I am in what I fear is only the middle of a lengthy correspondence with a local office on this topic on behalf of a client. I think I have detected two problems with the HMRC attitude:

1. The intention on the HMRC side is to avoid allowing a travel expense claim if at all possible; the idea that they should allow a claim resulting in the taxpayer paying the "right amount of tax" is beyond their ken.

2. There is, indirect, guidance in a number of pages of the EIM. In each case the manual author has interpreted s339(7) to require a change in the cost of journey or distance travelled. This is not what the legislation says but my client's claim is being resisted on this basis. cf EIM 32306 EIM 32300

In my client's case the sites he squentially worked at were approx 10 miles apart, yet HMRC are suggesting that no claim is allowed as the distance from home, (at approx 35 miles) is similar. I know that they are wrong in this &, just maybe, my most recent letter will produce an acceptance of this.

I have been unable to turn up any SPC cases on Rebecca's point as to how far apart sites need to be before one can safely treat the journeys as substantially different. Does anyone have experience that I could usefully quote?

travel expenses

richardgh | Wed, 14/03/2007 - 15:52 | Permalink

I find Horton v Young 1971 47TC60 very useful when challenged on allowable travel expenses.

Employed / Self Employed

Malcolm Veall | Thu, 15/03/2007 - 09:40 | Permalink

Horton v Young is a useful case, where Denning MR applied some commonsense: "If the commissioners were right, it would lead to some absurd results. Suppose that Mr Horton had a job at a site 200 yards away from his home, and another one at Reigate, 45 miles away. All he would have to do would be to go for five minutes to the site near home and then he would get his travelling expenses to and from Reigate. I can well see that he could so arrange his affairs that every morning he would have to call at a site near home. Instead of going to that absurdity, it is better to hold that his expenses to and from his home are all deductible."

But it i on self-employment not employment, where different statutory rules apply.