Relief for travel expenses

This First-tier tribunal decision in the case of Noel White (TC03354) was published on 3 March 2014. The principal point at issue was whether travel expenses can be claimed as a deduction for an individual who was a self-employed flying instructor and examiner.

Mr White worked almost exclusively out of two airports, at Bournemouth and Shoreham. On one occasion in the period under review he went to Lydd airport. He claimed travel expenses from his home where he had his base to the airports where he met his pupils, usually in the car park or in the coffee lounge.

He regarded his home as his business base because he kept his charts, books and records there, and was registered with the CAA at that address. He did not have an office and did not own or rent an aircraft at either airport.

Mr White’s situation was considered in relation to a number of cases that have been heard before the courts and the tribunals. In particular the tribunal considered the decision in Samad Samadian v HMRC ([2013] UKFTT 115 (TC)) which we covered when it was heard in the First-tier tribunal on 1 March 2013 and the Upper tribunal upheld the decision on 23 January 2014.

Travel expenses not incurred wholly and exclusively for the purposes of the trade or profession

Mr White did not persuade the tribunal that his travel expenses were incurred wholly and exclusively for the purposes of his profession of flying instructor. Following the case of Newson v Robertson ([1952] 33 TC 452), the tribunal decided that the expenditure was incurred in part because he chose to live away from the airports.

The tribunal also drew a distinction between the case of Horton v Young  ([1970] 47 TC 60), where Mr Horton was a self-employed bricklayer whose home was his base but he travelled to a large number of different sites for short periods of up to two to three weeks at a time. His trade was described as itinerant and he had no place which could be called a place of business except his home. He was successful in claiming relief for travel expenses from his home to these sites. The tribunal emphasised that Mr Horton worked at other sites with no predictability or regularity, whereas Mr White attended the same two airports regularly to carry out his profession.

What this means for self-employed individuals with a home base

The earlier decision in Samadian, where the FTT reached their decision by applying the principles in Mallalieu v Drummond ((1983) STC 665), raised the concerns that unless a claimant can demonstrate his business has been conducted as an itinerant (similar to Mr Horton), claims for travel expenses between home and place of business are likely to be disallowed.

This latest decision in Noel White shows that HMRC are prepared to apply the Samadian decision and challenge travel expenses claims where the self-employed individual claims home as a business base. Practitioners who act for clients who work from home and claim deductions for travel expenses to other places of business should carefully review such claims in the light of these decisions.

For further guidance on claiming travel expenses please contact Paul Howard or Martin Mann on 0845 490 0509.