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March 2014

Business Travel Mileage Claims

If you are self employed and currently claim tax deductions on business travel expenses beware.

An upper tier tribunal has ruled in favour of HMRC in a long running case concerning the tax deductibility of business travel expenses and it is likely that this will have wider implications for self employed individuals.

The appeal was brought by Dr Samad Samadian, a consultant geriatrician, following a first tier tribunal dismissed his claim to reclaim travel expenses for journeys between NHS and private hospitals, and between his home and private hospitals, stating habitual journeys had occurred as there was ‘regular and predictable attendance’.

Despite Dr Samadian having an agreement in place with HMRC as to which expenses of particular journeys are or aren’t deductible as expenses wholly and exclusively for the purposes of private practice, HMRC resisted his claim that travel between NHS and private hospitals was deductible.

The tribunal ruled that while the home office can be recognised as a place of business and a use of home claim allowed, the travel from that place of business in the home will not necessarily be allowable unless it is in pursuit of an ‘itinerant’ business journey.

It also stated that:

Travel expenses for journeys between places of business for purely business purposes are treated as deductible.

Travel expenses for journeys between home (even where the home is used as place of business) and places of business are treated as non-deductible (other than in very exceptional circumstances).

Travel expenses for journeys between a location which is not a place of business and a location which is a place of business are not deductible.

Whilst doctors will be HMRCs first target, given their recent success in this case, there will undoubtedly be a ripple effect and therefore it is extremely important that detailed mileage logs are kept, in order to fully support any deductions claimed.

Only time will tell whether HMRC attempt to apply the same rules to employed individuals where their employment contracts state that they work from home, but they have a regular place of business that they travel to.

To discuss your specific circumstances, please contact us and we would be happy to advise.