Travel from Home Office - Tax Deductible Yes or No ?

[Kurious2]

Hi - new poster here. I've been struggling with this issue - despite going through the issue in detail with a professional advisor (Chartered Accountant). I searched through the forum but haven't been able to find anything definitive on it yet.

I set up a Ltd Company this year - primarily engaged in consultancy work, with myself as a sole employee. I work from a Home Office, spending 2- 3 days a week here on work for clients, and developing the business, and typically would travel to meet clients on 1 or 2 of the other days, to either discuss the work, or deliver some particular aspects of it. I have multiple clients, spread round different parts of the country, plus one in the UK, and am currently tendering for more there.

My biggest expense currently is travel to and from clients. I have been religiously logging each of the journeys, mileage, date, client, destination, purpose etc - with a view to reclaiming the expenses from the company. I forwarded a sample month's worth of travel to my accountant, who is of the view that despite the fact the Home Office is my normal place of work, the travel expenses cannot be claimed as they are from a Home Office, and as stated in a Revenue Guide Note Part 4-10-01 for Sole Traders (which I'm not btw, I'm an employee of the Ltd Company):

"As a general rule, travel between home and work, even if some work is carried on at home, always carries the purpose of getting home – it facilitates living away from work. The duality of purpose renders the expense non-deductible"

This seems a bit draconian. The travel is claimed wholly and exclusively for the purposes of the business, and I genuinely work from home/am not contracting and working in a clients' premises and trying to claim my 'commute' as a taxable expense.

Is my accountant correct in this regard - or is he taking a more extreme interpretation than others might, and leaving me in a position where I'm going to end up paying for all of the business travel out of my own after-tax income ?

Any insight or help much appreciated, thanks.

 

[T McGibney]

It's difficult and perhaps unfair to second-guess your accountant here without knowing your situation in full, but I don't think your own interpretation is too far off the mark. You should be free to override your accountant's advice if you feel you have reason to do so but obviously a certain degree of risk attaches to that too.

 

[Purple]

From the Revenue site "Your employee's home is not regarded as their normal place of work. An exception to this is where there is an objective requirement that their duties be carried out at home."

In my unqualified opinion your office is as home, therefore there is an objective requirement that your duties be carried out at home.
If you are travelling to the same small group of customers each week then it might be inferred that their premises is your normal place (or places) of work but if you are travelling to different sites at different times then you should be alright.

 

[Kurious2]

Thank you folks. Having sounded out as many friends/associates as I can the general consensus seems to be that it should be fine to treat the travel costs as a bona fide business expense (as in fact several of them do already).

Not quite sure how to handle the issue with the a/c, if we fail to agree (as I'm pretty sure will be the case at this stage).

Is it in fact possible for me to instruct the accountant to treat the expenses as tax deductible - against his better judgement - or do I really need to start thinking about finding a new accountant at this stage ?

 

[T McGibney]

If you are travelling to the same small group of customers each week then it might be inferred that their premises is your normal place (or places) of work but if you are travelling to different sites at different times then you should be alright.

Very well put.

 

[T McGibney]

Is it in fact possible for me to instruct the accountant to treat the expenses as tax deductible - against his better judgement - or do I really need to start thinking about finding a new accountant at this stage ?

All depends on the personal dynamics. Your gut will know.

 

[Joe_90]

I would have always said that the base was the house but since the contractors project I’m not so sure.

It could be that you are using the home office for convienec and therefore the place of work changes to the clients office and therefore you are not entitled to claim expenses.

Personally I think that the contractor project was where Bob worked for Intel in Leixlip and lived and had his home office in Waterford and claimed travel from Waterford to Leixlip.

If you are clear that you have a portfolio of independent clients and your base is your home than I think that you would be entitled to the expenses.

 

[Kurious2]

Thanks all.
My gut feel based on the above is to declare the costs as wholly and necessarily incurred business expenses, and deal with the fall out from the accountant whatever arises

 

[zephyro]

Have you read [broken link removed]? Your situation looks similar to their example 8 in which case you wouldn't be entitled to a deduction.

 

[T McGibney]

Have you read [broken link removed]? Your situation looks similar to their example 8 in which case you wouldn't be entitled to a deduction.

Do bear in mind that such Tax Briefings don't necessarily have legal effect and shouldn't be taken as Gospel.

 

[Kurious2]

Have you read Revenue Tax Briefing 03/13? Your situation looks similar to their example 8 in which case you wouldn't be entitled to a deduction.

Thanks for that zephyro. I suppose with much of this the devil is in the detail:

"Alison is a director of a company with three engineering contracts. On most days she works from home by choice. Once a month she takes a day out to attend the premises of the three clients to discuss issues arising on the engineering contracts.

The travel and subsistence expenses incurred by Alison on the journey from her home to the first call and from the last call to her home may not be reimbursed free of tax. They are not expenses which are necessarily incurred “in the performance of the duties” of the office or employment."

There are similarities, but I don't work from home 'by choice' - it is my normal place of work. In the example above, there seems to be an implication that the individual has a choice of working at home - but has an alternative location where she can work, most likely in the premises of her own company. I don't have that option, so would argue that my expenses are necessarily incurred - and so should be deductible - no ?

 

[Setanta12]

The 'by choice' part is where she opts not to work at the client's premises and opts to work from home. Same as you.

This part of the tax-code is under attack in the UK and Ireland probably as result of the explosion in the gig economy; a recent UK case went against the old 'doctor getting a call in the middle of the night and therefore his duties started at home' argument.

 

[Purple]

The 'by choice' part is where she opts not to work at the client's premises and opts to work from home. Same as you.

He's not opting to work from home instead of the clients office. His clients don't offer him a work space; he goes there for meetings and then leaves, going back to his place of work (his home) to execute the work agreed after the meeting with the client.

I go and visit customers on a weekly basis and while I may add value and get paid for the work I do on-site my place of business is still my work address. It's the same for the OP except his place of work is also his home.

 

[Kurious2]

^ That would certainly be my interpretation of what occurs. The point about clients providing or not providing a work-space and facilities (comms/phone/pc etc) is a good one, and seems to be pretty central to the debate.

 

[zephyro]

There are similarities, but I don't work from home 'by choice' - it is my normal place of work. In the example above, there seems to be an implication that the individual has a choice of working at home - but has an alternative location where she can work, most likely in the premises of her own company. I don't have that option, so would argue that my expenses are necessarily incurred - and so should be deductible - no ?

If Revenue were to query this, you'd need to be able to show that your only option is to work from home. For example, have you anything in writing from clients (contract or otherwise) stating the requirement that the work will be done at your home office?

 

[T McGibney]

If Revenue were to query this, you'd need to be able to show that your only option is to work from home. For example, have you anything in writing from clients (contract or otherwise) stating the requirement that the work will be done at your home office?

Quite the paradox there. How on earth can clients dictate to a supposedly independent service provider that they must complete commissioned work at their home office?

If the contract dictates the location at which work is to be done and more specifically that it must be done at a home office,that would suggest it's likely to be counted as a contract of employment.

 

[peemac]

A simple question would be that if you could not work from home would be essential to have your own independent office to do your work.

If the answer is yes, then I would claim travel expenses.

 

[Purple]

If Revenue were to query this, you'd need to be able to show that your only option is to work from home. For example, have you anything in writing from clients (contract or otherwise) stating the requirement that the work will be done at your home office?

What?!
They could write "we don't care where you do it but you sure as hell aren't doing it here" in a contract.
If the OP is contracted to provide a service but the contracting party is not providing the necessary facilities to carry out the necessary work then the contracted party has to find himself a place to do the work. That is an office. He charges for travelling from his office to see his customer. The office is in/at his house. There is no other office. The contracting party does not provide an office. It's that or nowhere.

 

[torblednam]

At the end of the day, what's written in the contract matters a lot less than the facts as to how things happen in practice.

If the contract says "no way are you working here", but you end up on site there for the majority of the time that you bill, then it's quite clear that the written term has been altered by agreement somewhere along the way, or indeed that there was never any intention it would apply.

All these contracts tend to have a clause in them (which I must say I've never seen invoked in practice) stating that the contractors company can, by agreement with the client, have someone other than the named contractor/consultant carry out the work... a useful question to ask yourself if you're a contractor is where would that person do their work, and what t&s would you pay them, in addition to a market rate wage, at arms length...

 

[zephyro]

They could write "we don't care where you do it but you sure as hell aren't doing it here" in a contract.

That's true, was asking about OP's specific situation where the only option as things stand is to work from home. In general a clause along these lines would be the correct way to specify it in a contract.

At the end of the day, what's written in the contract matters a lot less than the facts as to how things happen in practice.

Also true but the reality is that the contract is the first thing Revenue would ask about and in OP's case, including a clause that may well satisfy them if they ever did ask would be much easier than having to find some way of demonstrating that there isn't an option to work on client site.