Worker cannot claim tax relief on commuting expenses

A man who had a series of temporary contracts working at different company sites has lost his appeal for tax relief on his travel expenses, on the grounds this was ordinary commuting

In this case at the First Tier Tribunal (FTT), the appellant Paul Nowak lived in Pontefract, and for at least part of each year worked for Weir Engineering Services Ltd.

He was an ‘actuator technician’ employed to work with electrical motors at various nuclear power stations throughout the country. He was separately contracted by Weir to work at a specific power station.

On each contract he worked weekends and would have one day off every two weeks. Nowak lived in lodgings close to the site where he was working. In between contracts when he was not contracted to work for Weir, he would return home and either work as a self-employed electrician or sign on at a job centre.

Weir paid Nowak a casual lodging allowance of £30 per day which was not taxed at source. No lodging allowance was paid for his days off. Weir also paid a mileage allowance for travel from home to and from each site at the start and end of each contract. Nowak contended that he was entitled to claim deduction for the difference between the mileage allowance paid by Weir and the 45p per mile which was HMRC’s approved amount.

Nowak submitted self assessment tax returns for each tax year in order to claim what he considered were expenses deductible from earnings in connection with his employment income.

HMRC considered that the expenses were not properly deductible and issued discovery assessments for tax years 2012-13 and 2013-14, and closure notices for 2014-15 and 2015-16, which were the subject of the appeal by Nowak at the FTT [Paul Nowak and Her Majesty’s Commissioners for Revenue and Customs, [2019] UKFTT 511, TC07307].

HMRC argued that each site was a permanent workplace at the time he was working there

HMRC argued that Nowak’s travel expenses were expenses of ordinary commuting. Since he worked at each site under separate contracts of employment, each site was a permanent workplace within s339, Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) at the time he was working there and his travel from home or lodgings to that site was therefore ordinary commuting.

For his part, Nowak contended that the sites should not be treated as permanent workplaces. Further, even if they were permanent workplaces, there were occasions where during a contract he was required to work at different sites.

The FTT stated that the only evidence to suggest that each site was a temporary workplace was the fact that Weir paid lodging and mileage allowances without deduction of tax. That was not sufficient on its own to satisfy the tribunal that the sites were temporary workplaces.

Contracts of employment

Having considered the facts, the FTT was satisfied that Nowak was employed by Weir under a series of separate contracts of employment. Each contract required him to work at a particular power station which, for the purposes of each employment, was a permanent workplace. In relation to each employment, the site was a place Nowak regularly attended in the performance of his duties for that employment. It was the base from which his duties were performed and the tasks he was required to carried out were allocated there.

As such, Nowak’s travel to and from each site was ordinary commuting within s. 338, ITEPA 2003 and he was not entitled to a deduction for the travel expenses he had claimed. The appeal was dismissed.

Julie Clift, Croner-i tax writer, said: ‘The legislation allows an employee in certain circumstances to claim travel expenses for journeys direct from home or lodgings to a temporary place of work, but not in the case of ordinary commuting as defined in s338(3) (ITEPA 2003).

‘The only evidence to suggest that each site was a temporary workplace was the fact that Weir paid lodging and mileage allowances without deduction of tax. The Judge said it had given him “pause for thought” but the evidence all pointed to the appellant working at permanent workplaces.’

Paul Nowak and Her Majesty’s Commissioners for Revenue and Customs, [2019] UKFTT 511, TC07307 

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