Tribunal – allowable expenses for the self-employed
The Tribunal recently heard an appeal in relation to the amount of expenses allowable for a self-employed taxpayer who spent a significant amount of time working away from home. The main decision under appeal concerned the taxpayer’s 2005-6 self-assessment return and specifically a deduction of £11,300 from taxable income for travel and subsistence expenses. HMRC issued a notice of enquiry into deductions for motor expenses, travel and subsistence.
The taxpayer’s gross income was found to be ‘substantially accurate’ but the invoices produced to back up the expenses claim were found to be severely lacking including claims that appeared to be for meals for two rather than one! The taxpayer ultimately provided bank statements to back up his expenses claims and HMRC allowed expenses of £5,020 and adjusted the balance (£6,010) on the taxpayer’s return. It is this adjustment that the taxpayer appealed. The Tribunal examined the evidence from both sides although the taxpayer was unable to explain exactly how he had arrived at the £11,030 deduction.
The Tribunal allowed the taxpayer’s appeal against the adjustment but felt that the taxpayer’s figure was too high and HMRC’s figure too low. The Tribunal replaced the adjustment of £6,010 with one for £2,420 on which HMRC was entitled to charge interest. The Tribunal also made adjustments to earlier years and HMRC did not seek any penalties.
Unusually, the Tribunal gave a full reasoned decision on this straight-forward appeal due to the‘unusual level of animosity the appeal generated’.