A special commissioner decided that travelling expenses incurred by a taxpayer between her home in Solihull (where she worked for two or three days a week) and her office in London did not qualify for tax relief under ICTA 1988, s. 198 since they were expenses of ordinary commuting and were not necessarily expended on travelling in the performance of the duties of her employment.

Facts

The taxpayer had been employed by the Revenue since 1977. Until June 2000 she worked at various offices in the Midlands, all of which were in daily commuting distance of her home. At that date the taxpayer was a working mother with three children; two of school age and a baby. She then obtained a new post with the Revenue. Once the necessary IT equipment had been installed at the taxpayer's home she worked part of each week from an office at her home in Kenilworth, Warwickshire and part at the offices of the International Division of the Business Tax Group of the Revenue in London.

The taxpayer was reimbursed the receipted amounts spent on travel to and from, and subsistence in, London over the period 5 June 2000 to 14 March 2004 when her job changed. The reimbursements were called a variation on excess fares allowance. The reimbursements were paid to the taxpayer on a quarterly basis and taxed under PAYE in the same way as pay.

The taxpayer appealed against the refusal by the Revenue of her claim for error or mistake relief for the year ended 5 April 2001, and against closure notices for the years ended 5 April 2002, 2003 and 2004. The issue concerned the deductibility of the taxpayer's travelling expenses between her home where she worked for two or three days a week and the Revenue's office in London where she worked the remainder of the week.

Issue

Whether the travelling costs were necessarily expended on travelling in the performance of duties of office or employment.

Decision

The special commissioner (Dr John Avery Jones) (dismissing the appeal) said that ICTA 1988, s. 198 required that the travelling expenses must be necessarily incurred by every holder of the office or employment in the performance of their duties. Whether the expenses were necessary was determined not by reference to the circumstances of the particular individual who held the office or employment but by the office or employment itself.

The essential difference between the parties was about the identification of the job and accordingly the nature of the duties. The taxpayer contended that the job in question was that of alternative working pattern international specialist, with the consequence that every holder of that job would have two workplaces, and therefore travel between them was necessary in the performance of the duties. The job in question was that of an international specialist. The duties were based in London. The fact that the taxpayer (and a few others) were permitted to work from home for part of their time was an exception made on account of the personal circumstances of the taxpayer (and a few others) which had nothing to do with the duties of the job of an international specialist. There were no duties that could be performed only, or were required to be performed only, at her home.

It was artificial to say that there was a separate job of alternative working pattern international specialist; the alternative working pattern was merely an option that the employee might have the opportunity to adopt with the agreement of the employer. The alternative working pattern was peripheral to the employment. The taxpayer contended that her job was different from that of the other international specialists but the difference was solely the alternative working pattern allowing her to perform duties elsewhere, rather than any inherent difference in the duties themselves or in the place where, by their nature, they were required to be performed (Pook (HMIT) v Owen (1969) 45 TC 571 considered).

For travelling expenses to be allowable under ICTA 1988, s. 198(1) they must be necessarily expended in the performance of the taxpayer's duties. Here there was nothing about the duties that required them to be performed at her home. To show that the travel expenses were necessarily incurred in the performance of her duties, the taxpayer would have to show that every holder of the job would be required to have two workplaces. This would be the case if she could show that the only possible appointees lived outside London and were unable to travel to London every day because of other commitments. However, the most that she could show was that she and some other holders of the job were in that position, which was not sufficient to qualify. Accordingly the travel expenses were not necessarily incurred in the performance of her duties.

The question remained whether the costs in issue were qualifying travel expenses as not being expenses of ordinary commuting or private travel (s. 198(1A)). The first head of that definition was travel between the taxpayer's home and a permanent workplace. The travel in question was between the taxpayer's home and a permanent workplace in London. The fact that the travel was also between her office at home and London did not prevent it from being from her home: see Kirkwood (HMIT) v Evans [2002] BTC 50. The taxpayer was in the same position as the taxpayer in the Kirkwood case and fully within the principle of the case even though there might be factual differences. The expenses were therefore excluded as being expenses of ordinary commuting.

(2008) Sp C 690.
Decision released 13 June 2008.