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Is 10,000 miles 45p limit per persn or per vehicle?

Is 10,000 miles 45p limit per persn or per...

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Hopefully there is a simple answer to this, but I've never come across this situation before.

Self employed client, uses a van and sometimes his car for work and claims mileage.

If he does 12,000 business miles in the year, 8.000 in the van and 4,000 in his car, can he claim all 12k at 45p per mile? or is the10,000 limit per person rather than per vehicle? 

thanks

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By JCresswellTax
12th Aug 2015 10:23

Well this is a concession by HMRC

So not sure you will get a definitive answer.

However, I am sure that the limits are 'per employment' so if you used two cars in your employment, you only get one lot of 10,000 @ 45p.

Therefore, I would be inclined to say you get one lot of 10,000 per 'self' employment and operate this on the same basis.

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By Elnaugh
12th Aug 2015 10:23

Limit is per person, does not matter how many vehicles he uses

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By Marion Hayes
12th Aug 2015 10:24

per person

in your situation.

 

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By Steve Kesby
12th Aug 2015 10:35

Per vehicle

For 2013/14, when the former concession was put on a statutory basis, onwards. ITTOIA 2005, s 94F refers.

If the situation described in the OP arises in an accounts period that is assessable in 2013/14 or later, all of the mileage can be claimed at 45p.

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Replying to Moonbeam:
Quack
By Constantly Confused
12th Aug 2015 10:45

Eeek

Steve Kesby wrote:

For 2013/14, when the former concession was put on a statutory basis, onwards. ITTOIA 2005, s 94F refers.

If the situation described in the OP arises in an accounts period that is assessable in 2013/14 or later, all of the mileage can be claimed at 45p.

Mr Kesby, I have never had cause to doubt anything you have ever said, but do you have any 'real world' experience that supports your post? 

I've re-read 94F a few times, and I can see how it could be read as 'per vehicle' (miles by a person using that vehicle), but playing devils advocate I can also see how it could be read as 'per year' (In a case where the total number of miles of relevant business journeys made in the period is greater than 10,000, the rate of 45p per mile is available only in relation to 10,000 of those miles - no mention of in each vehicle).

Has HMRC ever looked at it and given it their stamp of approval?

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By taxguru
12th Aug 2015 10:50

Business journeys

It's number of miles of business journeys made by a person in the period. The reference to 'that vehicle' is to separate the use of car or goods vehicle and motor cycle for which separate rates apply.

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RLI
By lionofludesch
12th Aug 2015 10:50

Driver

In my opinion, it's per driver.

If one partner in a two person partnership does all the driving, you get one wedge of 10000 miles.

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By Steve Kesby
12th Aug 2015 11:06

You need to read s. 94F...

... in the context of s. 94D(5). It is per vehicle. I don't care if HMRC say something different (which incidentally they don't); it is what the law says.

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Replying to memyself-eye:
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By taxguru
12th Aug 2015 11:10

Car or Motor cycle

Steve Kesby wrote:

... in the context of s. 94D(5). It is per vehicle. I don't care if HMRC say something different (which incidentally they don't); it is what the law says.

The relevant vehicle under 94D(5) is about whether it's car or goods vehicle (45p) or a motor cycle (24p).

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By Steve Kesby
12th Aug 2015 11:31

I disagree

S. 94D(5) refers to the relevant vehicle, being the one first mentioned in s. 94D(1) for which a deduction would otherwise be allowable (for a proportion of its running costs).

BIM75005 then says that "once a business has adopted the mileage rate for a vehicle, it must be applied consistently from year to year for as long as the vehicle remains in the business". This is referring to the relevant vehicle mentioned in s. 94D(4)(b).

The definition of M in s. 94F(1) then refers to that vehicle.

The and that are definite articles and not indefinite articles. Your interpretation simply is not supported by the language of the legislation, or the language of BIM75005.

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By taxguru
12th Aug 2015 12:53

I disagree too - last post

I disagree with you - the reference to that vehicle is simply about whether it's car.. or a motor cycle. I don't see much scope there for further interpretation. If one were to follow your interpretation then one would use one car up to 9999 miles and use another one during the year for another 9999 miles!!

Edit: just to add a couple of final points:

S.94F: the appropriate mileage amount in relation to a relevant vehicle for the period is—M × R where— M is the number of miles of business journeys made by a person (other than as a passenger) using that vehicle in the period

So when it says 'that vehicle' it's simply means that vehicle which is a relevant vehicle. And relevant vehicle is defined under s94D(2) to mean(2) “relevant vehicle” means a car, motor cycle or goods vehicle.

BIM75005 simply says mileage is allowable for business journeys which are interpreted in business miles, the first 10000 of which is eligible @45p

I would think it would be incredibly naive on our part to advise clients that they could claim 45p on any number of miles provided they use several vehicles!

 

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By Robert Hobbs
12th Aug 2015 11:51

HMRC View

EIM 31275 seems quite adamant that it is per employment and if more than one vehicle is used they are amalgamated and treated as a single vehicle.  Cars and vans are treated as a single kind of vehicle for this purpose which answers the OP.

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Replying to lh3f9764bg1g:
By Steve Kesby
12th Aug 2015 12:02

No it doesn't

Robert Hobbs wrote:

EIM 31275 seems quite adamant that it is per employment and if more than one vehicle is used they are amalgamated and treated as a single vehicle.  Cars and vans are treated as a single kind of vehicle for this purpose which answers the OP.

EIM31275 deals with the position for an employment, not a self-employment, for which the legislation (in ITEPA 2003, s. 229 to s. 232) does differ and does specifically refer to that kind of vehicle (M in s. 230(1)). The legislation in ITTOIA does not refer to the type or kind of vehicle, it refers explicitly to the relevant vehicle.

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Replying to lh3f9764bg1g:
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By cparker87
12th Aug 2015 12:59

But

Robert Hobbs wrote:

EIM 31275 seems quite adamant that it is per employment and if more than one vehicle is used they are amalgamated and treated as a single vehicle.  Cars and vans are treated as a single kind of vehicle for this purpose which answers the OP.

Yes, it might do, but that is the Employment Income Manual and will refer to provisions under ITEPA. What is at issue here is the ITTOIA provisions applying to unincorporated entities.

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By Marion Hayes
12th Aug 2015 12:14

Thanks Steve

I had missed that implication which is very important to some of my clients where they use a van and a car for different types of work related journeys. A very important and expensive mistake avoided.

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By cparker87
12th Aug 2015 13:09

Very interesting

I understand the unwillingness to contradict the ITEPA provisions for what is essentially exactly the same scenario from most contributors. 

I confess to simply transposing the ITEPA treatment to S/E previously and not gving it much thought thereafter. However, reading 94D-94F I concur with the allocation being per vehicle. 

94F(4) gives a little more weight too stating that a "Relevant business journey means any business journey made by a car or goods vehicle". Not the person driving it.

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Portia profile image
By Portia Nina Levin
12th Aug 2015 13:12

Portia is back! And it is PER TRADE

Everybody appears to have missed sections 94F(3) and 94F(4), which restricts the 45p rate to the first 10,000 miles of relevant business journeys.

Relevant business journeys are then defined as any business journey (one, or an identifiable proportion of one, which is made wholly and exclusively for the purposes of the trade) made in the period by a car or goods vehicle that is used for the purposes of the trade, and in relation to which section 94D applies in the period.

So take a partnership with five partners each using a car (8,000 miles), a van (4,000 miles) and a motorcyle (2,000) miles. The mileages given are per partner and are all miles on relevant business journeys.

So we have 10,000 motorcycle miles between them at 24p. £2,400.

And between them we have 40,000 car miles and 20,000 van miles. That is a total of 60,000 car and goods vehicle miles.

The first 10,000 of those car and goods vehicle miles is claimed at 45p and the remaining 50,000 car and goods vehicle miles is claimed at 25p. £17,000, giving a £19,400 total deduction.

Someone tell me I am wrong.

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Replying to Paul Crowley:
Quack
By Constantly Confused
12th Aug 2015 15:10

!

Portia Nina Levin wrote:

Someone tell me I am wrong.

You are wrong!

Just kidding x

Or more accurately, I no longer feel I am able to express an opinion on this matter!  I am out of my depth (and as a duck that is disturbing!!!) and worried about whales coming to eat me.

 

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RLI
By lionofludesch
12th Aug 2015 13:58

Interesting

That's an interesting interpretation.

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By JamesAnd
12th Aug 2015 14:21

Agreed with Portia - I would refer to P11d working sheet 6 note 2 (sorry cannot copy and paste).

 

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Portia profile image
By Portia Nina Levin
12th Aug 2015 15:59

You are not helping James

Whilst it is lovely to have you agree with me, your reference to a P11D worksheet, and, therefore, implicitly, the rules for employees, rather than the different rules for the self-employed, rather undermines your lovely agreement.

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By JamesAnd
12th Aug 2015 16:06

Don't see why it doesn't help 

Obviously, the self employed has the choice of claiming actual costs and not use the mileage rates but once they choose the later, surely the same principles must apply.

Glad to see you haven't changed - bet you ain't as gobby and rude to peoples faces!

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Replying to bernard michael:
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By cparker87
12th Aug 2015 16:19

=(

JamesAnd wrote:

Don't see why it doesn't help 

Obviously, the self employed has the choice of claiming actual costs and not use the mileage rates but once they choose the later, surely the same principles must apply.

Glad to see you haven't changed - bet you ain't as gobby and rude to peoples faces!

The same principles don't apply. What national insurance rate would you apply to self-employed earnings? 

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By paulhammett
12th Aug 2015 16:11

I've no contribution to make . . . . . .

but a very interesting debate and exchange of views. Hopefully there will be a definitive answer soon (but I doubt it).

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Portia profile image
By Portia Nina Levin
12th Aug 2015 16:16

@ Basil

I am not sure what part of sections 94F(3) and (4), that you apparently had previously read, you have misunderstood.

94F(3) In a case where the TOTAL number of miles of relevant business journeys made in the period is greater than 10,000, the rate of 45p per mile is available only in relation to 10,000 of those miles.

94F(4) Relevant business journey means ANY business journey made in the period by a car or goods vehicle–

(a)that is used for the purposes of the trade, and

(b)in relation to which section 94D applies for the period.

We do not construe the legislation purposively, unless it is unclear what it means.

If it meant what you say it means, section 94F(4) would simply say, "Relevant business journey means any business journey made in the period in the relevant vehicle." It is not at all unclear that it does not mean that.

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By JamesAnd
12th Aug 2015 16:36

@cparker

I am not sure that that is a relevant comparison.

All I am saying is that if you are using the mileage rates for inclusion in accounts for a self employed person as opposed to actual costs, why are the same principles not used.

I am not bothered if you can use a different basis. But what would make a pleasant change would be if the usual culprits on here could explain helpfully why, rather than coming out with their normal spite. (and I am not referring to yourself).

 

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Francois
By Francois Badenhorst
12th Aug 2015 16:39

Keep it on topic, please.

Or the thread will be closed.

Thank you,

Francois (moderator)

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Portia profile image
By Portia Nina Levin
12th Aug 2015 16:42

The rules for employees...

The rules for employees are contained in ITEPA 2003, sections 229 through to 232, whilst the rules for the self-employed are contained in ITTOA 2005, sections 94D to 94G, and they are expressed in entirely different terms.

These facts have been provided previously in the thread.

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By Adrian T
12th Aug 2015 17:06

You had me going for a while

(sorry for the glacial typing)

Sadly, I have interpreted it as per trade as well: it would be nice to claim some extra deductions for my clients.

In s94F, subsection 1, giving the amount for each vehicle ("that vehicle") refers to "business journeys", as defined in subsection 5. 

However, the limit in subsection 3 refers to "a car" and "relevant business journeys", defined in subsection 4 as used for the purposes of the trade and within s94D.

 

It would be simpler to state that "if M exceeds 10,000 miles" in subsection 3, or have a single definition for business journeys/relevant business journeys if this was not the case.

 

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Portia profile image
By Portia Nina Levin
12th Aug 2015 17:02

Adrian appears to agree with me
And since he has not, in the same breath, referred to P11D guidance, but to the legislation itself, the suggestion is that he has made appropriate deliberations.

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blue sheep
By Nigel Henshaw
12th Aug 2015 17:07

per vehicle

I always thought it to be as per Basil's comments.

It simply does not make sense for it to be as per Portia's, there are large fixed costs involved with a vehicle and this is why it is 45/25p split.

A trade could quite easily have a number of vehicles for different purposes, whereas an employee only ever needs one at a time surely.

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By Adrian T
12th Aug 2015 17:17

Absolutely

I agree that it is unlikely to be the intention of the legislation to make this rate per trade, rather than per car, but I think we all know that legislation enacted does not always match the intention.

So to be clear, I agree with the PNL strict interpretation of the legislation, but I think I will claim on a per car basis anyway, as that is my purposive interpretation.

How's that for fence sitting?

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Portia profile image
By Portia Nina Levin
12th Aug 2015 18:25

@ Basil

Your third paragraph of your penultimate post is based on what would be equitable, and I would remind you that "equity and income tax are strangers". I have no other comments, as we do not agree on any point.

To my mind, the legislation is perfectly clear, and if a taxpayer does not like the result that this simplified expenses legislation affords them, they should not avail themselves of it.

In Basil's example the trader could continue to claim mileage for van 1, and claim actual expenses for van 2.

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By Steve Kesby
12th Aug 2015 17:58

I have to change my vote

I am unable to disagree with the interpretation of s. 94D(3) and (4) that has been offered.

So I am forced to accept that the effect of the legislation is, indeed, per trade, and not per vehicle, as I had previously stated.

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By ireallyshouldknowthisbut
12th Aug 2015 18:14

.

Being blissfully unaware of the legislation is sometimes a bonus. 

My head now hurts. 

Thanks to our contributors, this is why I come on accounting web in one post. 

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By King_Maker
12th Aug 2015 20:32

Not the best drafted piece of legislation.

Although not a ringing endorsement, my initial view is in favour of per vehicle rather than per trade.

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David Winch
By David Winch
12th Aug 2015 20:57

It says this but means that

At risk of being off topic, in a different area of law entirely the Court of Appeal recently had to consider the meaning of the phrase

at any time after the date on which the offence was committed

and concluded that this caught something done later on the same day on which the offence was committed.

In other words "the date" was read to mean "the time on the day".  The reason being that there was no logic to parliament having intended to allow a criminal a window of opportunity until midnight to do things which the legislation could not then catch.

Who knows whether a court might at some future date interpret the '45p legislation' to be less restrictive than it appears on a strict reading of the words on the page.

David

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David Winch
By David Winch
12th Aug 2015 21:08

Just a thought

Does this legislation apply to the calculation of the income tax liability of an individual - so that for each individual member of a partnership he / she has up to 10,000 miles allowable at the 45p rate?

So if Andy, Bill & Colin are in partnership each of them may be eligible for up to 10,000 miles at 45p?

That would seem to be what most people think the legislation ought to mean!

David

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Replying to Paul D Utherone:
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By shoshana
14th Aug 2015 15:25

Brilliant, Basil

fawltybasil2575 wrote:
Well, there we have it ! What a story ! Steve announces he's putting up for the vacant post as leader of the Conservatives. Basil [ageing Tory member for Cluckpuddlewick; and a strong supporter of Steve's ideals, but not "a yes man" and known to occasionally disagree Steve's policies] promises his undying support to Steve in his leadership camapaign. Taxguru [leader of the Labour Party] denounces Steve's political views and, in the bar at the House of Commons, invites Steve to defect, and to join the Shadow Cabinet - Steve adamantly declines the invitation. Basil remains loyal to Steve's campaign, but [known for his occasionally equivocal nature] repeats his support for Steve [abroad on crucial Foreign Affairs matters, thought to be in Africa]. PNL [quiet for a while after a brief holiday][redoubtable Shadow Cabinet member, and known for somewhat idiosyncratic debating style] pledges his [or officially "her"] support for Taxguru's policies and leadership. Basil remains loyal to Steve, defending himself from withering attacks from PNL in the House of Commons. Steve returns from his meeting with the Prime Minister for Nigeria and, lo and behold, in a sensational House of Commons statement [following a secret Meeting with Taxguru, leader of the Labour Party] announces his defection to the Labour Party, having been promised consideration for the office of Shadow Chancellor of the Exchequer. Basil, distraught and disillusioned, but appreciative of the strong support of fellow MPs, announces his leaving the Conservative Party to found a new "Purposive Construction" Party. David's expert advices are sought by Basil as to the viability of the proposed new Party. Basil. ​

 

Whilst not advancing the debate one iota, this is quite the most brilliant post I think I have ever seen.

Keep it up, Basil.

For what it is worth, and at the risk of incurring the wrath of others, I agree with the per vehicle argument whilst accepting that the law is not 100% clear.

Malcolm

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David Winch
By David Winch
12th Aug 2015 21:35

@Basil

It's good to know that we AWEB people don't need Jeremy Corbyn to spice up our debates!

David

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Red Leader
By Red Leader
13th Aug 2015 11:54

solid gold!

.

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Portia profile image
By Portia Nina Levin
13th Aug 2015 13:16

@ David

Is not your example a straightforward example of the mischief rule of statutory interpretation?

Equally, I think that sections 94F(3) and (4) are there to prevent the very mischief that is the subject of the OP, and so should be interpreted accordingly.

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By carolelmcarre
13th Aug 2015 13:39

Wow!

Only read about the first 10 comments, but if HMRC guidance is so unclear no wonder I sometimes (actually often)  have problems.

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David Winch
By David Winch
13th Aug 2015 14:09

@PNL

What the Court of Appeal said was

"We are satisfied that a literal interpretation of section 77(5)(a) is anomalous to the explicit purpose of the Act. It could not have been intended that criminals have a day's grace to dispose of their assets or to require either the prosecution, the enforcement agencies or the court to devise a scheme, outside the Act, to catch relevant assets. A literal interpretation of section 77(5) would require this.

 

. . .

We have no hesitation in endorsing the argument that there must be a purposive construction of the provision and in doing so, the subsection must read as though the date upon which an offence is committed must refer to the actual time of commission"

I don't think judges these days refer to the 'mischief rule' but rather to adopting a purposive construction of the statute.  The end result may be the same though.

I rather wince when TV dramas have the judge saying to the jury something about "beyond reasonable doubt" (wording no longer used) or - worse still - have a judge in an English court banging a gavel (which English judges have never had).

But I digress . . .

Would you agree that business partners Andy, Bill & Colin are each entitled to 10,000 miles at 45p?

David

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Replying to DJKL:
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By chatman
13th Aug 2015 14:12

"beyond reasonable doubt"

davidwinch wrote:
"beyond reasonable doubt" (wording no longer used)

What wording is used nowadays?

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Replying to johnt27:
David Winch
By David Winch
13th Aug 2015 14:25

Sure

chatman wrote:

davidwinch wrote:
"beyond reasonable doubt" (wording no longer used)

What wording is used nowadays?

The jury are invited to convict only if they are sure of the defendant's guilt.

David

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Portia profile image
By Portia Nina Levin
13th Aug 2015 14:14

No

I think Andy, Bill and Colin have one 10,000 limit if they adopt the simplified expenses basis for all of their vehicles. See my post at 13:12 yesterday.

They can use an actual basis (subject to private use adjustment) rather than adopt the simplified expenses basis for any or all of the vehicles if they do not like that outcome.

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By johngroganjga
13th Aug 2015 17:36

It's a long time since I did my law exams (the ones I had to pass to become an accountant), and I am certainly no lawyer.

But I am sure I can remember being taught that part of the Court's approach to the interpretation of statutes was to attempt to discern the intention of Parliament, even resorting to Hansard where necessary.

We all know what the purpose of the 10,000 mile rule is.  It is obvious and no more than common sense. Clearly the marginal cost of running a car falls as the annual mileage increases. 

 

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David Winch
By David Winch
13th Aug 2015 19:18

Statutory interpretation is a somewhat technical legal area.  First base, if you like, is that the statute means what it says.

But if the meaning is unclear or ambiguous or there appears to be an anomaly then you have to resort to other approaches.  That MIGHT involve having a look at Hansard (although that is something of a last resort I think).

Generally in criminal law the benefit of any remaining doubt will go to the defendant.

There can also be an issue where a statute appears to overturn a long held & fundamental tenet of English law (such as legal professional privilege) but doesn't expressly state that this is the intention.  (In that event there may be a presumption that the language should be interpreted so as not to overturn the old law.)

There can be a further issue where the statute appears to conflict with the European Convention on Human Rights (in which case the UK Human Rights Act requires the court to 'read down' - i.e. dilute - the statutory wording to preserve Convention rights).

So it's one for lawyers rather than accountants methinks!

David

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By johngroganjga
14th Aug 2015 08:09

Yes if course ultimately it's a matter for the courts - which was my point really.

It seems to me that too many people in the above thread are content to read the statute and then when they come up with a counter-intuitive interpretation just shrug their shoulders and say so be it. Well I don't think it's that simple. I think our legal system is cleverer than that.  

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