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Shop & Flat 150 miles from home

Shop & Flat 150 miles from home - claim for the flat?

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Self employed person runs a rented shop 150 miles from home.
The rent covers the shop and the flat upstairs.
The premises is clearly the 'base of operation'.
Travel between premises and home is clearly 'regular and predictable' so disallowed.

However he stays in the flat 3 or 4 days a week, and the only reason for the flat is to work in the shop - so the flat element primary purpose is clearly for the business.

Are the rent and rates for the flat allowable? If not 100%, would there be a case for a high business apportionment?
I am aware of cases where long stays in hotels and flats have been allowed - but I don't think these were 'base of operations' cases.

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18th Jul 2019 15:49

I vote no. The "need" to use the flat arises because of where he lives, not because the business requires it. If the client lived in the next street to the shop, the business wouldn't need him to stay in the flat.

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18th Jul 2019 16:15

I concur with the above analysis. However, would he be able to rent the shop without the flat?

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18th Jul 2019 17:55

I would say no. The flat is not required for the purposes of trade.

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19th Jul 2019 14:48

@VNN Very good point.
There was no original intention to take the flat, but a combination of disruptive activity in the flat and it subsequently becoming available, the rent for flat and shop is 'all-in-one', together with the utilities.
So the flat was taken on to protect the business of the shop from negative impact. Staying in the flat is therefore secondary.

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to Gone Sailing
19th Jul 2019 16:17

I put it to you that you are not telling us facts; you are trying out arguments to see if they float.

I think this one is irrelevant. If the rent is paid and the flat remains empty, I don't think you need the argument. The cost sounds allowable.

If there is private use, there is private use and you need to adjust accordingly.

In that context, you might want to consider McLaren v HMIT (that's from memory, so forgive me if I've misremembered).

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to Tax Dragon
19th Jul 2019 16:30

Thanks.

You have the essence of the facts, you would expect a client to be protected. My second post was answering a question. I seek the answer, not a ruse. I'm too old for ruses.

If the subject area (or similar) has passed through several tribunals, it is, by definition, grey.

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to Gone Sailing
19th Jul 2019 16:57

I wasn't seeking to offend... I do that without trying.

It was just quite a change from the only reason being to work the shop to renting subsequently due to a wish of avoiding recurrence of problems with tenants.

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to Tax Dragon
22nd Jul 2019 10:36

I was not aware of the rent agreement, and the unusual reasons for it, at the time of the orginal post. My bad.

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to Gone Sailing
22nd Jul 2019 11:03

Well, yes, frankly. IMHO it's [***]-poor to make up a reason because you didn't know the real ones.

Since it's a separate rental for the flat, with (we now know) mixed purpose (not w+e business), your worst case outcome is that the whole expense is disallowed. It might be hard to avoid that outcome, since the only actual use of the flat is the private one.

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to Tax Dragon
22nd Jul 2019 11:14

To be fair, I think the latest facts are that there is not a separate rental for the flat. Nonetheless, an apportionment does seem to be required, based on McLaren.

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to Vile Nortin Naipaan
22nd Jul 2019 11:45

That's three McLarens in a row - one expensive traffic jam (but might make that 150 mile journey more enjoyable).

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to Tax Dragon
22nd Jul 2019 12:01

Two (threads), TD. You mentioned McLaren above.

Muppet.

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19th Jul 2019 17:11

Looking at it another way, he lives above the shop and travels to his weekend home when he likes. No deduction...

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22nd Jul 2019 11:12

I agree with my learned friend that McLaren v Mumford fuchs the "motive in the taxpayer's mind" argument (based on bentley, Stokes & Lowless v Beeson), thanks wholly to the subconscious motive test invented to keep Lady Mallalieu's floodgates closed.

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