A freelance sole trader photographer has claimed business mileage for 2019/20 in her records.
HMRC CEST has confirmed self-employment status.
She has significant investment in camera/IT equipment (almost £20k), has a website, business insurance and spends time working from home on projects.
When she first came to us three years ago, she had 5 main clients who she worked with as a photographer/stylist on set projects for different parts of the year for say 10-20 days at a time each attending their premises and completing finishing work at home. She also has a small number of 'direct' clients. These were all local at this point.
For 2019/20 tax year she has become more reliant on a single main client and now spends most of her time at their studio (using her own equipment etc.). She still works from her home office finishing images etc using her own expensive IT equipment.
She relocated further away from this client at the beginning 2019/20 so there is considerable mileage to this client (almost 20,000).
The client has been attending this location for several years although I would consider this only to be regular and significant since October 2018.
Is it reasonable to continue to claim business travel to this location for 24 months from October 2018 or is this prevented sooner?
There has never been any long-term contractual commitment and work could stop at any point so there has never been the ‘intention’ that this location be a permanent workplace.
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Replies (14)
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Hi,
Yes, I had a look at Ross Martin comments on this case.
Does 24 months come into it at all in terms of travel to a temporary workplace, or is this sort of travel disallowed as soon as it becomes regular and predictable?
The clients increase in work at this location evolved over time rather than being the result of signing up for any contract. It's week to week if not day to day work with no commitment either side so only 'predictable' in hindsight.
Sadly, Samadian was rightly decided for the wrong reasons (or inadequate explanation of the rationale), with the disastrous subsequent effect that the White decision then went on to impose a requirement on soletraders to be omnipresent. If you regularly attend several places they are all your bases of operation now according to the White decision, then followed by Jones and Jain.
Sadly, nobody does Latin anymore and the most important words in Horton v Young have been lost. Locus in quo.
@OP A significant amount of planning/preparation and completion work at a home studio and carting colleagues and equipment to "site", would put it squarely within Horton v Young to my mind.
How much travel expenses are we talking about? Also, is she going to the one client more regularly or has she just lost the other work and not yet picked up new clients (which must be pretty f***ing tough at the moment, let's face it).
The mileage in question would amount to a claim of £7,107 so tax & NI saving of £2,061 plus cash saving re payments on account.
It's a big difference for this client.
They have taken the work where it was still available hence the greater focus on the single customer able to pay.
They are always looking for additional clients as they know it's not ideal for many reasons.
They have certainly been attending the customers premises daily but they do have a genuine home office set up where they do further processing of the images etc.
It's a guess but, if I said 5 hours a day on site and 3 hours at the home office does that change anything?
I think 37.5% is a pretty significant amount of the work.
My view is claim it and argue the toss with HMRC. See where it gets you, and then take a view as to whether to drop it out of pragmatism. I think you need to prepare for it now as if you're going to end up going to tribunal (you don't have to but failing to plan is planning to fail). So:
- be very clear about the old position and how your client's facts fit in with Horton and Young at that time: multiple clients, nearly 40% of her work (on each project) done at home, with the non-home work being a necessity of the projects, and that's where her clients find her.
- how things have changed and how it is not her planning to have just this one client, and she is looking for new projects and will continue to do as much of the work on a project as she can from home and that is where her new clients will find her.
- do mention the term locus in quo, as well as base of operation, and resist an argument that the clients are all bases of operation on the basis that she can't be expected to be omnipresent.
- distinguish facts as much as possible from Samadian, White, Jones and Jain, and not just that she isn't a doctor! A doctors can only be doctors at where they do doctoring argument isn't going to help, because photographers can only be photographers where they take photographs.
-get your facts straight about her house move and why she moved, and how she expects to pick up clients all over in due course.
The 24 months is a red herring.
Samadian
and the Milkman !
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37635
also consider a london cabbie
Driving 25 miles from home into Central London
Where is his/her base of operations ?
Agreed, the 24 months is irrelevant for a sole trader. Travel to a regular place of business is not allowable.
Travel to a regular place of business is not allowable.
I don't agree that the law in this area can be condensed to that single sentence, much as HMRC would like it to be.
Well, quite. I'm not writing a letter to a client, just some bod on t'internet.
Right, so we're all now consciously making no effort to make this forum any better? That what you mean?
Dulls is too polite to say anything. However, I have noticed that this is one area in which Dulls has repeatedly displayed considerable understanding. The OP can clearly ignore your comments (no offence of course, as I'm basically paraphrasing you yourself), but would do well to pay careful attention to the comments that Dulls makes. IMHO.
Oh, FWIW, I hadn't noticed the comment at 17:28 when I wrote the above. Nuff said there I think.
I thought that 24 months was irrelevant and applied to employees rather than the self employed along with the 40% time rule.
I mentioned it as it's still referred to in the Tax Cafe Guide 2020/21 'Tax Planning for Sole Traders & Partnerships' where it says the general rule is that travel is allowable unless the workplace is intended to be the individual's permanent base, or actually becomes their work base for a period of two years or more.
So it refers the temporary workplace concept.
Was the Tax Cafe content refering to an employee of a sole trader business?
Conflating tax law or rules for self employed and employees is widespread.
Lazy editorial practice.
Then content copy and paste on website content ploliferates
However, Ross Martin :
"How do you obtain tax relief on travel, subsistence and accommodation?"
"The employed and self-employed each follow different rules for Income Tax and Self Assessment
and there are **quicks ** typo !
in the rules for subsistence and accommodation.
The following guides outline the different treatments and contain examples and case law"
OP
alert Tax Café to the error.
May have repeated the text in several editions.
