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Subsistence distance...

Best practise '5 mile from base' applying to input VAT, but what about CT and Sole Traders?

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Hi All,

I have seen that when reclaiming input VAT, general best practise is only to claim subsitence where the business purpose takes one at least 5 miles away from home.

I could not find similar clear guidance for CT, or indeed for IT for Sole Traders.  Your input would be much appreciated.

Many thanks in advance.

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By Matrix
16th Oct 2018 18:50

If it is subsistence then why does it matter how far away you are? Yesterday I met a new client 1 mile away and kept the receipt from my cup of tea and will claim this as subsistence. Admittedly I had just had a cup of tea at home and wasn't very thirsty but you tend to have to buy something if you meet in a public place.

I thought that if the travel was allowable then so is the subsistence.

Thanks (2)
By clark.hall
16th Oct 2018 19:41

Subsistence is allowable where the associated business travel is too. Don’t think distance comes into it.

Thanks (2)
Replying to clark.hall:
By atleastisoundknowledgable...
17th Oct 2018 06:44

Fairly sure that there’s a 5 mile rule for directors for VAT. Or at least was 10 years ago when I was told about it.

Thanks (1)
Replying to atleastisoundknowledgable...:
By ireallyshouldknowthisbut
17th Oct 2018 09:41

I think its a "someone's personal rule of thumb" as opposed to a "this is what the legislation says"

Thanks (2)
By Philosophic1
17th Oct 2018 11:04

Thanks to you all for your input. The link below is where I have previously seen the "5 mile best practise" idea. As already mentioned, it's more of a rule of thumb (I would say best practise). Under the 'Business owner' heading in the link (my question relates to owner-managed businesses):

I'm sure I also saw it in some HMRC guidance.

Whether allowable or not for VAT is often (I know not always) the same as CT, hence I wondered about this specific point. So, what's the consensus?

Thanks (2)
Replying to Philosophic1:
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By Portia Nina Levin
17th Oct 2018 11:29

This "five mile test" is complete b0110x in my opinion. Either it's bona fide subsistence or it isn't.

What the article says is that the author does not perceive a challenge from HMRC if the subsistence is more than five miles from the trading base.

That makes two assumptions. That the individual has a base, and ordinarily works at that base, rather than being perambulatory.

It also assumes that HMRC will challenge it on the basis of well why didn't he go back to his base for lunch, etc. And that question may be answered by the facts (ie it was an all day job, that happened to be 3.5 miles away, and is identical in all other respects to the all day job the day before, which was 6.5 miles away).

So, I repeat. It is either subsistence or it isn't subsistence.

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Replying to Portia Nina Levin:
By Philosophic1
17th Oct 2018 14:20

Thanks very much. I was deliberating over the same issues you mentioned. Your reasoning makes perfect sense.

Thanks (0)
By David Heaton
17th Oct 2018 12:08

I think the 5-mile rule (of thumb) originated in the Inland Revenue's own in-house rules for staff, many years before the current travel rules were written. Look at the legislation: ITEPA 336 to 340A, bearing in mind that 'travel' includes subsistence while travelling. If the payment meets the conditions, it's exempt (the sections referenced refer to a deduction, but it's now exempt if deductible, so there's no P11D reporting and no need to claim a deduction).

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Replying to David Heaton:
By Philosophic1
17th Oct 2018 14:33

This is great - thank you. (Every time I venture onto, I'm reminded of how 'clear as mud' many of the sections are. Even when doing tax exams, I dreaded 'the general rule', and then 10 exceptions.)

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Replying to Philosophic1:
By Tim Vane
22nd Oct 2018 09:37

What rot. The problem with is that it is hopelessly out of date and should never be relied on. The legislation is your friend, and far more trustworthy than all the carpy guidance on other gov sites, but if you are working in tax in a professional capacity you just have to fork out for a commercial up to date copy of the legislation otherwise you will soon be lost in a quagmire of obsolescence.

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