29.10.15 Self-employed worker’s Travel Expenses not exempt from Income Tax

In the case of Dr David Jones and The Commissioners for Her Majesty’s Revenue and Customs [2015] UKFTT 0477 (TC), Dr David Jones, the taxpayer, is a self-employed consultant anaesthetist who works through his own private practice. He travelled via his car or motorcycle from his home, where he had an office, to hospitals and, less regularly, between hospitals. As a result, Dr Jones entered his travel expenses in his Self-Assessments for the three years 2008-09, 2009-10 and 2010-11. 

The issue in this case was whether the expenses incurred in relation to Dr Jones’ journeys were incurred wholly and exclusively for the purposes of his self-employed private practice.

HMRC took the view that not all of this travel was deductible for Income Tax purposes and determined that only the travel between hospitals was allowable.

The taxpayer kept a log of his travel for the year 2008-09 and so, HMRC used this to calculate the travel expenses they believed were deductible. The claims for journeys between hospitals in the year amounted to £775.00 out of £7,327.00 travel expense claimed.

There was no travel log for the years 2009-10 or 2010-11 therefore HMRC used the 2008-09 travel log and disallowed the same proportion of travel expenses to arrive at the best estimate that could be made for the total tax in dispute over three years. HMRC decided this figure was £7,919.56.

The outcome of the appeal was primarily decided on other case law such as Samadian v Revenue & Customs Commissioners [2014] STC 763 which considered the application of the “wholly and exclusively” test. See our news item on this case here.

The appeal was dismissed. This was on the basis that Dr Jones had regular patterns of attendance at some of the hospitals where he would carry out a large amount of work.

This is another case that highlights the difficulties that self-employed taxpayers face when deciding which travel costs are deductible.

The full case can be seen here.