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Are expat landlord airfares an allowable expense?

Are return air fares from abroad to UK an allowable expense for expat landlords with UK property?

My wife, Ann, and I are thinking of making a business trip early in 2018 to have meetings with bankers, brokers, tenants, and tradespeople we have not seen for several years.

We will do visits to, and inspections of all the properties still remaining in our portfolio in order to assess and make judgments regards their condition and to evaluate their future prospects for capital appreciation and rental returns. This exercise will help us make informed decisions regards which properties we will continue to own as part of our core portfolio, and identify those we will aim to sell off.

Would our business trip expenses, and especially our return air fares from Taiwan to the UK, be offsettable against income tax?
 
Thanking you for your kind attention.

Mike Roberts
 

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17th Oct 2017 07:55

Have you asked your accountant? With such a significant level of assets and complex affairs, I expect you have someone who advises on tax implications...

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to WhichTyler
17th Oct 2017 11:05

Yes I did ask my accountant who said we could not offset the air fares, but I always get a second or third opinion and just called HMRC, whose opinion counts most, and they confirmed the expense is offsettable within the limits of the 'wholly and exclusively' test so I am very chuffed!

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to taiwanmike
17th Oct 2017 11:08

Straight from the horse's mouth then. How much better could it be.

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to taiwanmike
17th Oct 2017 11:11

So now you have to decide who you trust most - your accountant, or some bod on the hmrc switchboard. Although, as it happens they're almost certainly both correct; the expense must be wholly and exclusively incurred, and unless you do nothing else in the UK except visiting and assessing your property portfolio it won't be.....still feeling 'chuffed'?

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to Kevkava
17th Oct 2017 11:37

Actually, whatever the circumstances, they won't satisfy the wholly and exclusively test, by virtue of the decision in Newsom v Robertson; the expense is not an expense of the property business, it is an expense of living in Taiwan, away from the business.

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to Portia Nina Levin
17th Oct 2017 11:55

Ah, good point Portia, now even I'm feeling less chuffed!

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to Kevkava
17th Oct 2017 14:27

See my response to Portia and you may feel more chuffed again ...

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to Portia Nina Levin
17th Oct 2017 11:57

Ah, good point Portia, now even I'm feeling less chuffed!

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By jcace
to Portia Nina Levin
17th Oct 2017 12:16

Unless the rental business is carried on from Taiwan.

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to jcace
17th Oct 2017 14:28

Which it most definitely is.

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to Portia Nina Levin
17th Oct 2017 14:26

Thanks for your comments. However, I think we will satisfy the 'wholly and exclusively' test because the HMRC officer I spoke to on the phone, who took time out to get advice from a senior colleague, specifically said they treat expats visiting the UK like UK landlords who have to travel to their properties in the same way. And when I asked for his advice in writing he said he could send me an email but he could and would make a note of our discussion and their advice on my self assessment record. In varying degrees all landlords live away from their business.

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to Portia Nina Levin
17th Oct 2017 15:31

Are you conceding this one? This isn't a commuting issue if the base of operations is in Taiwan.

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to andy.partridge
17th Oct 2017 16:56

No. The base of operations referred to in Newsom, was "clarified" to be the "locus in quo" of the business in Horton. As jcace correctly states, what matters is the place where the business is "carried on", which has been held to be the place where contracts are concluded. You may be happy to consider that to be a place some 6,000 miles from the assets with which the business is carried on. I remain sceptical, despite the OP's assertions to the contrary.

The OP wants relief for the expenditure. Let him have relief for the expenditure. But there is no point the rest of us speculating absent all the facts.

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to Kevkava
17th Oct 2017 14:19

Yes still chuffed because HMRC allows for 'incidentals' meaning chance encounters and other normal day to day experiences that do not strictly fall within the scope of the 'wholly and exclusively' limitation.

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17th Oct 2017 09:20

I love the way you have told us your wife's name!

Howling at that :)

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to JCresswellTax
17th Oct 2017 10:05

A gentleman who has no idea of the bear pit he has walked into.

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to JCresswellTax
17th Oct 2017 11:06

So happy to have brought a little levity and joy to the proceedings!

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17th Oct 2017 10:41

Have Mike or Ann got any family in the UK perchance? I bet they're going to feel snubbed that you're not seeing them!

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By DJKL
to Portia Nina Levin
17th Oct 2017 10:58

Portia Nina Levin wrote:

Have Mike or Ann got any family in the UK perchance? I bet they're going to feel snubbed that you're not seeing them!

Quarantined for tax purposes. I wonder how near they could get within the UK before it became an issue;- loudhailers and binoculars across a field?

Personally speaking I would not feel snubbed not seeing family , more relieved.

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to Portia Nina Levin
17th Oct 2017 11:08

We have two daughters, Anoushka and Cecilia, who will be very 'incidental' to our trip.

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to taiwanmike
17th Oct 2017 11:13

I bet they'll be 'chuffed' to learn that!

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to Kevkava
17th Oct 2017 11:32

Kevkava wrote:

I bet they'll be 'chuffed' to learn that!

HMRC will be now he's put his plans in writing.

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to Kevkava
17th Oct 2017 14:33

We are not concealing the fact that we will see our daughters. One of them lives in our UK main residence where we will be staying so seeing her will inevitably be an incidental part of our stay. And a similar situation applies to our second daughter so we are not pulling any wool over any eyes that may be interested.

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By rhino83
to taiwanmike
17th Oct 2017 11:54

Is Anoushka about 5ft 6ins, with long dark hair, very slender, and working in the hospitality sector?

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to rhino83
17th Oct 2017 14:37

Yes Anoushka worked as a waitress at Dunston Hall for a while. She would be 'chuffed' to be described as 'very slender'. Have you met her?

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By mrme89
to taiwanmike
17th Oct 2017 14:43

I am sure she will be thrilled that you are talking about her on a public forum to a bunch of strangers.

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to mrme89
17th Oct 2017 14:55

I prefer to think I am talking to professional people one of whom may be a point of contact. I somehow doubt lechers and pervs are using accountingWEB as their prefered port of call for sleazy thrill seeking.

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By mrme89
to taiwanmike
17th Oct 2017 15:20

You haven't talked to Portia long enough.

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17th Oct 2017 10:46

Mike and Ann, the lovely wee expat couple.

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17th Oct 2017 11:00

I sense there will be more comments that will cause them to remember why they left the UK in the first place.

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By mrme89
17th Oct 2017 11:12

I bet you spoke to an 'expert' at HMRC too, didn't you?

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to mrme89
17th Oct 2017 11:21

For a meaningful dialogue you have to have 'experts' at both ends of the phone.

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17th Oct 2017 11:50

I have had a similar situation with a client, and asked them to keep a full diary whilst in the UK. He was genuinely engaged with the portfolio for 8 out of the 10 days spent in the UK and then flew home. No problem. I think he had done about 90 hours work including travel as they are in 4 cities.

if that's the pattern, then fine. Your problem, apart from thinking some random comment from a HMRC call centre counts as advice (that is quite amusing to a practising accountant) is it sounds to me like a family trip which you will combine with some business too.

if challenged it will come down to the facts, can you show a packed diary for the duration of your trip? Or are you over for a month and doing 15 hours work? The fact Mrs Roberts is coming will make it a very hard claim to succeed with. What business purpose is there for you BOTH to attend? Doesn't seem anything much like a business trip I have ever been on so I would conclude you are trying it on myself, as will a revenue inspector. The numpties on the helpline probably only started on Monday morning, the inspectors have at least been a on 6 weeks course.

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to ireallyshouldknowthisbut
17th Oct 2017 14:48

Thanks for your forthright comments. The HMRC officer I spoke to actually left me on hold for a few minutes to consult a senior colleague before coming back to me and he also said the advice they were giving could and would be added as a note to my self assessment record for my accountant to access and refer to if required so I gave more weight to their response for these reasons. The reason both my wife and I are doing the business trip is because we are 50% share partners in our property business and weigh the facts and take decisions jointly. Does this additional information cause you to reconsider the validity and sincerity of our endeavour?

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to taiwanmike
18th Oct 2017 13:10

Dear Mike

Thanks for putting this question out. The information that you have obtained from HMRC is illuminating and more generous than expected. When your Accountants submit your Tax Return(s) to HMRC get them to put the HMRC guidance and date in the white space. HMRC won't read it but it may give you some protection in the future if HMRC wake up and try to deny the claim or make a discovery assessment.

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17th Oct 2017 12:04

If one is given the wrong answer several times from several different sources, then, my son, you are on an internet forum.

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to Tim Vane
17th Oct 2017 14:57

Amen to that.

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17th Oct 2017 12:55

is there any mileage (!) in the fact at this is not a trade ?

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By possep
17th Oct 2017 17:05

This will not be allowable (even ignoring Newsom v Robertson mentioned before) as there is duality (however small you are making it). If you are in the UK for, say, 14 days and just 1 is spent on non work issues, including visiting etc. I think you are gubbed. Did the friendly HMRC staff base their answers on any prevailing case law? Thought not......

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17th Oct 2017 17:19

I have to say that the longer the time I spend talking to the Revenue, and the more senior level I get to, I find they are even less coherent when it comes to the tax legislation.

As a word of warning, their notes are likely to read 'we could not possibly have known the full facts when giving this advice and therefore are not bound by the advice given'.

That said you have received two conflicting opinions and seemingly chose the internet as the tie breaker...I can only assume the heat has finally got to you...

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18th Oct 2017 11:03

HMRC property rental toolkit specifically allows for business travelling expenses for property lets. The only time it would be challenged is if you employed an agent.

The case of Newsom v Robertson dates back to 1952 and is nothing to do with property but refers to a barrister working from home. That was in a pre-computer age and now in 2017 most barristers can work from home with the aid of their computer, making coming and going to Chambers superfluous, that case looks somewhat dated and could be challenged.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

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By maurice
18th Oct 2017 13:03

The travel expenses might be allowable. PIM 2210 quite generously says (para 2 & 3):-
"But the cost of travelling from home to the let property and back will only be allowable if the purpose in making the journey is exclusively a business one. ‘Revenue’ costs are running costs (such as fuel, road tax, bus fares etc) as opposed to the capital costs (the purchase price of a car or van for example).

Travelling expenses will not be deductible if the purpose in making the journey is partly private and, for example, includes a visit to the shops to buy weekly groceries. But a landlord can still have a deduction for a journey made solely for business purposes if any personal benefit they get is only incidental; for example, where they happen to stop on the way to pick up a newspaper. "

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By ShayaG
18th Oct 2017 13:03

Hi Mike,

1) Most of the switchboard staff at HMRC are extremely ignorant of taxation, having had a few weeks training if that. The reality is that your expense is not technically deductible. Check out the court decisions here

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37000

2) There is a weird quirk in travel costs in which HMRC have an extra statutory policy to permit "apportionment" of costs not wholly and exclusively for the purposes of business between business and private costs, even though the law says no part of the expenditure is allowed, which may help you.

3) You would be justified nevertheless in relying on switchboard staff's advice in claiming the deduction, provided you kept a careful note and obtained a reference number that the advisor can provide for you to refer back to if challenged. If you didn't get this the first time, call again - though I suspect the individual who answers the phone is likely to have entirely different (and usually wholly unfounded) opinions on the deductibility of this expense.

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