Have a friend who has come to me in a bit of a panic, looking for help. Not really my area, so looking for advice.
He is mainly employed in the construction industry, but over the last couple of years has had a few spells under CIS as well as being employed and also unemployed. He would normally work away from home
His return for 2009 had a compliance office check for his self employment. This period was for a few months working away from home under CIS and he claimed as expenses travel, accommodation and subsistence. The subsistence was claimed as a rate per day but was not excessive, probably very low for his breakfast / evening meals etc.
The Tax Officer in the compliance section has ruled that none of these are eligible as not incurred wholly and exclusively in the performance of trade. His tact was that the ‘base of operations’ was the place of work, about 200 miles from his house, which was his trading address, so all costs to travel and stay away from home have been disallowed by this ruling.
He also went on to ask about self employment in the 2010 return which has 2 periods of self employment and 2 periods of employment all away from home in different areas as well as being unemployed. The letter also mentions penalty clauses and fines and received a lot of pamphlets with it, plus a paragraph at the end to ask if he will accept this to allow the officer to close the file and send him a revised bill. If these costs are disallowed, then most of the increased income then falls into higher rate tax for the year and would also be subject to National insurance on the profits.
My friend wrote back to say he did not accept the officers decision and that all the costs where incurred Wholly and Exclusively, as could not perform this job without travelling and staying close to the workplace. He also asked why he is looking at 2010 as this was not the year under review
The officer rejected this and sent him a lot more HMRC leaflets highlighting his points, referring to case law etc. Though some of the other points on these notes seem to contradict what the officer is saying. The officer replied that he can look into 2010 without having to open up a compliance file for that year as the points may be related.
Can anyone help with rulings, case law, websites etc? The guy has a young family and has had a few period of unemployment over the last few years so is not really in a position to pay at present, so is a bit stressed.
He also feels he has been unfairly treated as he mentioned that the HMRC have been continually reviewing his employment returns any time he has done them in previous years. (Don’t know the details, but seems unusual) He wants to fight it as he is fed up getting reviewed, plus he believes the costs were legitimate, but he is not sure what to do