First-tier Tribunal (Tax)

[2010] UKFTT 299 (TC)

TC00587

Appeal number: TC/2009/10875

Appeal against Closure Notice – whether claims for relief for accommodation and travel expenses allowable for locum consultant endocrinologist

FIRST-TIER TRIBUNAL

TAX

                                       DR. WOLFGANG REITER                       Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

TRIBUNAL: Miss J Blewitt (Judge)

                        Mr M Farooq (Member)

Sitting in public in Birmingham on 17^th June 2010

Mrs Helena Perrett, Presenting Officer, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.     This is an appeal against a Closure Notice issued under section 28A Taxes Management Act 1970 (“TMA”) on 28 February 2008 for the period 2003/2004. The increase in duty arising from the amendment £2,252.23 which relates to expenses for travel and accommodation which were disallowed. The Appellant appealed by way of letter and Notice of Appeal dated 18 March 2008.

2.     The Appellant did not attend the hearing, having notified the Tribunal by letter dater dated 9 June 2010 that he would be unable to attend due to a new appointment in France. However the Tribunal was helpfully provided with a thorough Statement of Case from the Appellant upon which he relied at the hearing. Mrs Perrett for HMRC provided further documents by way of additional evidence to the Tribunal on the morning of the hearing, however it was acknowledged by HMRC that the documents had not been sent to the Appellant. Given that the Appellant had not had the opportunity to comment on the documents, the Tribunal did not rely on any information contained therein in reaching its decision.

3.     The facts in brief, are that the Appellant was engaged as a locum consultant endocrinologist at Eastbourne General District Hospital during the period 2003 to 2004. The engagement was made through recruitment agency, Medical & General Recruitment Services Ltd (“M & G Ltd”). The expenses subject of this appeal were incurred in two areas; mileage and accommodation costs, the latter comprised of rental on a flat, council tax and a deposit. The accommodation claim was brought about due to the fact that the accommodation provided by the hospital at no cost was felt by the Appellant to lack “a decent level of hygiene” as detailed in his Statement of Case. As a result the Appellant sought alternative accommodation and which was provided. However, as set out in the Appellant’s statement of Case, rats could be seen from the windows at sunset and “the Appellant’s feelings were hurt so much, that it was impossible for him to stay there. He moved into private accommodation in Eastbourne...not far from the Hospital...” Mileage was claimed by the Appellant for travel between his home in Wolverhampton and the hospital; the initial claim was for two return trips but as per the Appellant’s Statement of Case the claim was later reduced to one trip at a cost of £87.60.

4.     A complicating feature of the case was brought to the Tribunal’s attention at the hearing; namely that the Appellant returned his earnings on his self assessment return as income from employment. HMRC accepted that they had in the course of the enquiry accepted that the Appellant was an “employee” and did not seek to argue otherwise at the hearing. However the concern was raised that under strict application of section 44 of Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”), the Appellant may not fall within the category of “employee” and may have been eligible to claim relief on items he had not. The Tribunal considered this point carefully, and whilst it was fair and proper for the point to be raised by HMRC, the Tribunal took the view that as the Appellant was not present to make submissions on the point, it was not fair to consider the issue in his absence when it had never before been raised with the Appellant. Furthermore it is clear from the Appellant’s Statement of Case that after detailed analysis of the applicable legislation, the Appellant took the firm view that he was an employee and in such circumstances the Tribunal did not feel it was in the interests of justice to take into account matters upon which the parties had previously agreed. It is of course open to the Appellant to consider this issue separately and seek guidance from HMRC as to any potential benefits it may have for him in the future.

Travel

5.     The Appellant claimed the cost of his travel between his home in Wolverhapmpton and the hospital on the basis that the hospital was a temporary workplace within the meaning of section 339 ITEPA 2003. The Appellant helpfully set out the relevant legislation within his Statement of Case and referred the Tribunal to the authorities of Rickets v Colquhuon 10 TC 118 and HM Inspector of Taxes v Evans [2002] EWHC 30 (CH). The tests are laid down by virtue of sections 337, 338 and 339 ITEPA 2003, namely whether the expenses are “necessarily incurred on travelling in the performance of the duties of the employment” with section 338 providing the definition of “ordinary commuting” and section 339 defining “temporary workplace.”

6.     In deciding whether the Appellant incurred the travel expenses in the performance of the duties of the employment, the Tribunal carefully considered the provisions set out above. The Appellant explained in his Statement of Case that a Locum Consultant is required to reside no more than 30 minutes from the hospital and therefore the travel expenses were imposed upon him, as they would on any holder of such a position, to perform his duties. The Tribunal did not feel that this was sufficient to fulfil the criteria set down by section 337 ITEPA 2003. The hospital is clearly the base where the Appellant’s duties were carried out throughout the period of employment and for a specified number of hours each day until he returned home.

7.     The Tribunal went on to consider whether the travel amounted to ordinary commuting. In order to be deemed a temporary workplace, the Appellant’s attendance must be either to perform a task of limited duration or for some other temporary purpose. It was noted that HMRC had repeatedly requested sight of any contract of engagement the Appellant in order to clarify this point, however were assured by the Appellant that there was no written contract with M & G Ltd. The Appellant sought to persuade the Tribunal in his written submissions that his attendance was full time and lasted from 2 June 2003 to5 April 2005, beginning with an initial agreement for a two month period. On that basis the Appellant contended that the employment was with M & G Ltd, who had always acted as his agent, and therefore the period of work at the hospital was not more than 24 months, nor did it comprise of all/almost all of the period for which he held employment with M & G Ltd.

8.     The Tribunal did not accept this argument and took the view that the Appellant had failed to distinguish between the separate contracts of employment; whether they be written or more informal agreements as the periods the Appellant had worked were 2 June 2003 to 2 July 2003, 2 July 2003 to 26 September 2003 and 1 October 2003 to 31 January 2004. The Tribunal took the view that for each period when the Appellant continued to work at the hospital, employment was in reality with the hospital who continued to engage him and the Appellant therefore fell within the provisions of section 339 (5) (a) (ii) ITEPA 2003 in that the Appellant’s attendance at the hospital for each of those three periods comprised all of the period for which he held the employment. The fact that M & G Ltd are instructed by the Appellant to find appointments as and when necessary does not, in the Tribunal’s view, mean that they hold him in continuous employment, as opposed to the hospital, otherwise on the Appellant’s own argument he would fall foul of the provision for work over 24 months not amounting to a temporary workplace. It was also the view of the Tribunal that the tasks performed by the Appellant were not of a limited duration or for some other temporary purpose (section 339 (3) ITEPA 2003) as each period was effectively a new contract/period of employment as required by the hospital.

9.     In deciding that the hospital was the Appellant’s permanent workplace, it follows that the travel expenses are not allowable as any expenses incurred by the Appellant were in the course of ordinary commuting between his home and the hospital.

Accommodation

10.  The test in relation the Appellant’s claim for relief on accommodation is found under section 336 ITEPA 2003. The employee must be obliged to incur the cost as holder of the employment and it must be incurred wholly, exclusively and necessarily in the performance of the duties of the employment. The Tribunal also considered all of the authorities to which the Appellant and HMRC helpfully referred.

11.  The Tribunal considered the Appellant’s submissions that he incurred the expense of private accommodation wholly throughout the period of his employment at the hospital and as a result of the requirement upon him to live 30 minutes from the hospital when his home was in Wolverhampton. The Appellant also submitted in his Statement of Case that he was on standby duty at certain times to deal with emergencies and his responsibility began on receipt of a telephone call.

12.  The Tribunal found as a fact that having been provided with free accommodation, and then alternative accommodation upon complaint, it was the Appellant’s decision to rent a private flat. The Tribunal makes no findings as to the conditions of the premises provided and did not feel that this had any bearing on whether the Appellant is entitled to seek relief.

13.  There was no evidence before the Tribunal to support the Appellant’s assertion that he is required to live no more than 30 minutes away from his base, and whilst it is not unreasonable to suppose that on occasion medical practitioners of such standing are preferred to be nearby, it is, in the Tribunal’s view, no doubt a matter which the employee takes into consideration when deciding whether or not to accept such a post. There being no evidence before the Tribunal to show any such duty or requirement put upon the Appellant, we do not accept that this, in itself, entitles the Appellant to claim relief, particularly bearing in mind that accommodation had been provided by the hospital.

14.  In respect of the Appellant’s argument that he was required to be on standby duty, the evidence before the Tribunal was that this would be one in every ten nights. There was no further evidence on the point to detail in what way the Appellant performed his duties at his residence and for that reason the Tribunal found as a fact that the purpose of the accommodation was to provide the Appellant with shelter and that whilst he may have, on occasion received a telephone call from work, the Tribunal found that there was no evidence that it amounted to anything more than that; in the same way that one could have occasion to complete paperwork at home, both incidental in the Tribunal’s view to the performance of the real duties, that being to treat patients at the hospital. The Tribunal did not accept that being on standby duty in itself satisfied the test. The Tribunal distinguished the Appellant’s circumstances in this case to those in the case of Pook (Inspector of Taxes) v Owen [1970] AC 244, 45 TC 571 following the guidance of Lord Wilberforce [1970] AC at 262 the Tribunal found as a fact that there mere fact of standby duty is not enough, that the Appellant in reality had only one place of work, that being the hospital and therefore no expenses were incurred necessarily on travelling in the performance of the duties of the employment.

15.  For the reasons set out above, the Appellant has not discharged the burden of proof that the amendments are excessive.

16.    The Tribunal dismissed the appeal and confirmed the amendment figure in the Closure Notice issued on 28 February 2008 of £2,255.23.

17.    This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

TRIBUNAL JUDGE

RELEASE DATE: 2 July 2010