In Dr Samad Samadian v HMRC [2014] UKUT 0013 (TCC) a self-employed doctor was unsuccessful in his appeal to the Upper Tier Tribunal: his claim for tax relief on travel between different workplaces was disallowed.
Round 1: First–Tier Tribunal findings and decision
Back in 2013 the FTT decided that a doctor’s expenses incurred in travelling between his office based at his home and private hospitals were disallowable for tax, because his journeys had a mixed purpose. The FTT found that:
- The doctor worked at four different hospitals under NHS and private contracts and also had an office at home.
- Home was his invoicing address, where he kept his medical instruments and where the majority of his administration took place.
- Home qualified as a place of business.
- He carried out a significant amount of professional and administrative work at home and it was essential for the doctor to maintain an office outside the hospitals where he ran his private clinics. (We presume, although it was not mentioned, that the cost of having an office was allowed as being incurred wholly and exclusively for the purposes of the doctor’s profession.)
- Attendance at specific private hospitals was regular and predictable and involved significant performance of his clinical work.
- The doctor was not “itinerant” (although he occasionally made house visits to patients) and the case could be distinguished from Horton v Young as, whereas in Horton, the bricklayer’s home was found to be the taxpayers "locus in quo", "his base" and his "only place of business" the building sites on which he worked were not fixed or regular places of trade.
- Dr Samadian had three different places of business, his home and two hospitals. His attendance at each hospital was regular and predictable even though his use of each as a work place was only temporary and transient (he shared his room with other consultants).
The FTT thought that these situations should be decided according to their own facts and according to whether travelling is:
- in the course of a business or
- travelling to get to the place where the business is carried on.
As the doctor was carrying on his business in several places, he claimed travel between the different work bases. However, the judge decided that travel to and from private hospitals and the office was not wholly and exclusively incurred, because, on general principles, the office was also at the taxpayer’s home and so part of any journey was to allow the taxpayer to leave home.
To arrive at this result, the judge had to find a way to get around the ruling in Horton v Young, which had concluded that travel from a home office to building sites was allowable. He did this by deciding that the more permanent nature of the doctor’s different workplaces disallowed travel between them.
Round 2: Upper–Tier Tribunal findings and decision
Dr Samadian appealed in respect of his travel expenses for journeys:
(a) between the NHS hospitals where he is employed and the private hospitals where he works in his private practice, and
(b) between his home and private hospitals,
both of which were held by the FTT to be disallowable.
The UTT upheld the FTTs decision and concluded that:
- Travel expenses are treated as deductible in relation to itinerant work.
- 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.
Commentary
Our original concern was that the FTT had devised a permanent/temporary workplace rule for the self-employed. Our concerns now deepen. The UTT in part of its decision says, "The “wholly and exclusively” test is to be applied pragmatically and with regard to practical reality..." and it then leaves us with a deeply unpractical result. If your business is based at home, travel to and from other places of business is allowable sometimes, but not in other cases. It depends on the other workplaces.
See Travel (self-employed) for comparison of the different tax treatment for different types of self-employed worker.
Summary of decision
|
Journey to and from |
Result |
|
Home to/from NHS hospitals |
Disallowed as NHS work is an employment |
|
Home and office to/from private hospitals |
Disallowed as although all work is self-employed the tribunal thought that there was duality of purpose |
|
NHS to/from private hospitals |
Disallowed as NHS work is an employment |
|
Home to patient’s home or other care location |
Allowed as the patient’s homes are not regular workplaces and there was no duality of purpose |
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