In order to determine what travelling and subsistence expenses
are allowable it can be useful in some cases to establish where the
business is carried on (Horton v Young [1971] 47TC60 see
BIM37620). Normally the cost of travel
between the business base and other places where work is carried
out is an allowable expense while the cost of travel between the
taxpayer's home and the business base is not allowable. Carrying on
significant business activities at home does not mean that travel
between home and another place where the business is conducted is
thereby allowable - see Newsom v Robertson [1952] 33TC452 (see
BIM37605).
What is the business base is a matter of fact to be
established in the individual case.
Where the taxpayer owns or rents separate business premises away from their residence there is normally little doubt that these are the base of the business.
There are some types of business where the taxpayer has no
separate business premises away from home. For example a doctor
whose only surgery or an accountant whose only office at their
residence. In these cases the doctor's costs in travelling to visit
patients and the accountant's costs incurred in visiting clients
are both clearly allowable. Similarly an insurance agent who has no
office away from their residence but who visits clients would also
incur allowable travelling expenditure.
In the cases above the taxpayer would normally visit a large
number of different premises to carry on business. The position is
rather different where a subcontractor works at one or a very small
number of different sites during the year. In such a case it may be
that the premises where the taxpayer carries on the business are,
in fact, the business base. If this is so, the cost of travelling
between the taxpayer's home and the business base should be
disallowed.
Following the decision in Horton v Young [1971] 47TC60 (see
BIM37620), where a subcontractor works at two or more different
sites during a year travelling expenses between the taxpayer's home
and those sites should normally be allowed.
However, where the subcontractor works at a single site in
the year and this is the normal pattern for the business,
travelling expenditure between the subcontractor's home and the
single site should only be allowed if the home is in some real
sense the centre or base of the business. That will depend on the
facts of the case and specifically what business activities are
carried out at home.
Where the subcontractor provides services to one principal
and for this purpose travels regularly at their own expense to one
place from which the subcontractor is conveyed at the principal's
expense to other locations, the subcontractor should, as regards
that principal, be considered to have one working place.
Similarly drivers who at the start of each day go, at their
own expense, to a garage or depot to collect their vehicle which is
returned to the same garage or depot at the end of the day should
be considered as having one working place.
Caillebotte v Quinn [1975] 50TC222 (see
BIM37660) is authority for disallowing
the cost of a subcontractor's lunches where there is a regular work
pattern involving travel to different sites within a narrow radius
of the subcontractor's home.
Where such costs are not deductible there can be no
apportionment of the expenditure to allow the additional expense of
lunching away from home. The treatment outlined above applies even
though the ‘business base' is at the home address.
In Prior v Saunders [1993] 66TC210 (see
BIM37665) the subsistence costs of a
sub-contractor whose work was carried out for several years in an
area of the country away from `his home base' were disallowed
following the same principles.
However, if the subcontractor is obliged to incur the costs
of overnight subsistence when working away from the business base
you should not object to reasonable expenditure on accommodation
and subsistence. The reasonable cost of a meal should be allowed
whether it is taken at the accommodation or within the vicinity of
the accommodation.
For general guidance on subsistence costs and meals
associated with overnight stay away from home for business purposes
see
BIM37670.
