My client is a contractor, working on two or three sites at a time in the North East and North West. This involves a lot of travelling and staying away from home for much of the week. He is usually only at home at weekends, although is often working Saturdays as well, so I usually can only see him Sunday evenings.
He has just had a PAYE inspection and the two main areas areas were sub-contractors and travelling. These were all accepted with no extra tax to pay and the only requirement was that each fuel receipt should have the name of the employee and vehicle reg written on each. They are all company owned commercial vehicles and no cars.
However, the one item they queried was the claim in the company accounts for "use of home as office", although this wasn't mentioned in their notice of the visit. They wanted to know how the figure in the 2014 accounts was calculated-£2,600 (£50 wk).
The claim in the first accounts was 55 wks to 30/9/10 £1,100 (£20 per week) then £23 per week for 2011 and 2012, rounded up to £1,200. Turnover was £67k, £125k and £500k respectively.
In 2013 the turnover was £800k and 2014 £500k so we increased it to £2,400 (£46wk) and £2,600 (50wk) respectively.
The office is a spare bedroom, containing a desk, chair, computer and cabinets. Our argument is that even the smallest office would cost £50 per week, without rates, water etc. However, their view is that as the client hardly uses it because he is working away, we can only claim about £4/£5 per week. If we rented an office we would pay the same rent regardless of how much we use it.
Have HMRC hardened their attitude and should we fight it?