Scaffolder’s expense claim has no supportby
An employed scaffolder’s claims for work-related expenses were summarily rejected by HMRC. Although the FTT agreed with HMRC, it suspended the penalties imposed due to a lack of HMRC guidance for employees.
In June 2017, Storey filed tax returns for years 2014/15 to 2016/17, reporting his employment income as a scaffolder and claiming employment-related expenses totalling £31,890 over the three tax years. No notice to file a tax return under TMA 1970, s 8 was issued for any of the tax returns, so these were voluntary returns.
In June 2018, HMRC opened enquiries under TMA 1970, s 9A into each of the returns and requested evidence of the expenses incurred.
The taxpayer’s agent sent HMRC schedules of mileage and expensed items (including tools and clothes). However, the records were incomplete.
As a result, HMRC adjusted the returns, disallowing the majority of the employment expenses, and adding car and fuel benefits in Storey’s 2015/16 return. In October 2018, HMRC issued closure notices for all three years, with assessments totalling £12,998.
HMRC issued a penalty under FA 2007 Sch 24 for the inaccuracies, which after reductions, was 18% of the potential lost revenue of £12,998 (ie £2,339.63) for a careless prompted disclosure. The taxpayer appealed [TC08090].
One of the main expenses in contention related to mileage.
Storey was employed as a site manager who attended different sites to perform his duties. Although he was given a company van, the taxpayer claimed that the mileage expenses related to the use of his personal vehicle to carry out his employment duties.
The records provided to support the mileage claim were sparse, but the biggest discrepancy came in the claim itself; the returns claimed that 60,000 miles had been driven between April 2015 and June 2017 in Storey’s personal vehicle, while the MOT records for the vehicle showed just 38,458 miles.
Storey’s agent argued that while the discrepancy was unanswerable, a reduction was due and not all mileage should be written off.
The FTT found that, given the discrepancies, the mileage log was practically unusable. In addition, the absence of records meant that the taxpayer could not establish that merely a reduction was due.
As a result, HMRC’s disallowance of the mileage expenses was upheld.
Storey also claimed other expenses such as subsistence, tools, and accountancy fees. The FTT also had to decide whether such expenses were incurred wholly, exclusively and necessarily in the performance of the taxpayer’s employment duties.
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