Medics travel expenses

In what might be a landmark decision in the
interpretation of ‘wholly and exclusively’ expenditure, Dr Samadian has lost his protracted battle
with HM Revenue & Customs (HMRC) over his claim for business
mileage. Dr Samadian has 56 days to appeal against the ruling made on 28 January 2013.
Dr Samadian has endured an enquiry which started over 7 years ago and has gone through 3
Tribunal Hearings.

Dr Samadian is a geriatrician, and specialises in the health care of elderly people.
He works full time for the Epsom and St Helier NHS Trust, in an employed (PAYE) capacity, at two hospitals in south
London; the St Helier and the Nelson. He has a permanent NHS office, with full administrative
support, including a secretary.
In addition, Dr Samadian holds weekly out-patient sessions at two private hospitals; St Anthony’s in
Cheam and Parkside in Wimbledon. His NHS secretary acts as his secretary in his private practice in
her spare time.
His private patients are generally wealthy, insured, over 75 years of age and with multiple medical problems.

 

The Tribunal panel led by Judge Kevin
Poole, acknowledged that Dr Samadian had a dedicated office
in his home which was used for his professional
activity.

However, the panel did not accept that the home
office was the starting point for calculating  business mileage involving habitual journeys.

The decision might have a wide interpretation across all professional self-employed activity, where
the business owner undertakes substantive work at home, but also has another business base at
which they deliver their expertise on a regular basis.

For example, a surveyor may draw plans in a home office, but finalise the work in a studio at
his office premises.

An accountant may regularly work at home in the morning  and then travel into the main office to conduct a meeting in the afternoon. If business mileage is claimed, HMRC could now argue that mileage is disallowable.

Claiming expenses without a receipt

In certain circumstances it may be possible to claim expenses from your employer and not be required to include a formal receipt. In brief the company can set ‘scale rates’ for frequently incurred expenses and get these rates agreed by HMRC.

New guidance has been published by HMRC which empowers employers to set scale rates for particular expenses. Where these scale rates are agreed employees can claim them without the normal requirement to produce a receipt.

Examples illustrated by HMRC’s web site include subsistence payments and cleaning of protective clothing or uniforms.

The following notes outline some of the issues that need to be considered when setting scale charges that will qualify under this concession.

  • It is only possible to claim the scale charge when the underlying expense has been incurred. For example if a daily subsistence allowance was paid, irrespective of the employee actually incurring subsistence expenditure every day, HMRC would treat this as a payment of earnings and tax it accordingly.
  • HMRC intend that scale rate payments only cover expenses which are widely incurred and for which it is often difficult to get receipts.
  • Scale rates should be set at “modest” levels – at an amount that will be enough to cover the relevant expense.
  • Scale rates must be agreed with HMRC before any payments are made to employees.

HMRC make suggestions for a process of sampling in order to quantify the level at which scale rates are set.

If your reimbursements to employees are significant it may simplify your accounting if you consider introducing scale rates for appropriate expenses, we can help.

A “tasty” footnote: Whilst researching this article we came across the following HMRC directive regarding claims for subsistence, in particular a claim for the cost of sandwiches/packed lunch if working away. If you make yourself a pack-up lunch using your domestic supplies, the cost of the food cannot be reimbursed tax free by your employer nor can you make a claim on your tax return if you are not reimbursed. If however you purchase a ready made sandwich this cost can be reimbursed or a claim made on your tax return!