Upper Tribunal Tax and Chancery Chamber

UT/2023/000049 - [2024] UKUT 00233 (TCC)

Fecha: 16-May-2024

deductibility of subsistence expenses: relevant legislation

deductibility of subsistence expenses: relevant legislation

29.

Before the FTT and in this appeal, the parties proceeded on the basis that the legislation applying for the purposes of NICs (Footnote: ¹) was materially similar to that applying for income tax, and so, as did the FTT, we focus in this decision on the income tax position.

30.

The relevant income tax legislation is contained in Chapter 2 of Part 5 of ITEPA. References to sections below are to sections of ITEPA unless stated otherwise. In relation to an expense falling within one of the provisions of that chapter, the effect of sections 333 and 334 is that the expense is deductible from an individual’s earnings. Where the expense is reimbursed by the employer, the reimbursement constitutes taxable earnings but the expense is deductible from those earnings, so that the reimbursement is effectively tax-free.

31.

Subsistence expenses fall within the provisions relating to travel expenses which, so far as material, provide as follows:

338 Travel for necessary attendance

(1)

A deduction from earnings is allowed for travel expenses if-

(a)

the employee is obliged to incur and pay them as holder of the employment, and 

(b)

the expenses are attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment. 

(2)

subsection (1) does not apply to the expenses of ordinary commuting or travel between any two places that is for practical purposes substantially ordinary commuting. 

(3)

In this section ‘ordinary commuting’ means travel between-

   (a) the employee’s home and a permanent workplace, or

(b)

a place that is not a workplace and a permanent workplace.

339 Meaning of ‘workplace’ and ‘permanent workplace’

(1)

In this Part ‘workplace’, in relation to an employment, means a place at which the employee's attendance is necessary in the performance of the duties of the employment. 

(2)

In this Part ‘permanent workplace’, in relation to an employment, means a place which- 

   (a) the employee regularly attends in the performance of the duties of the employment, and   

(b) is not a temporary workplace. 

This is subject to subsections (4) and (8).

(3)

In subsection (2) ‘temporary workplace’, in relation to an employment, means a place which the employee attends in the performance of the duties of the employment—

(a) for the purpose of performing a task of limited duration, or 

(b)

for some other temporary purpose. 

This is subject to subsections (4) and (5).

(4)

A place which the employee regularly attends in the performance of the duties of the employment is treated as a permanent workplace and not a temporary workplace if– 

  (a) it forms the base from which those duties are performed, or

   (b) the tasks to be carried out in the performance of those duties are allocated there.  

(5)

A place is not regarded as a temporary workplace if the employee’s attendance is

(a)

in the course of a period of continuous work at that place-

(i)

lasting more than 24 months, or

(ii)

comprising all or almost all of the period for which the employee is likely to hold the employment, or  

(b)

at a time when it is reasonable to assume that it will be in the course of such a period.

32.

So, no deduction is available for “ordinary commuting”, which is, broadly, travel to and from a permanent workplace. HMRC maintain that each assignment undertaken by a worker was a separate employment, so each workplace was a permanent workplace as a result of section 339(5)(a)(ii), the employee’s attendance comprising all of the period for which they held the employment. Mainpay maintains that, because all of the assignments were carried out under the terms of a single employment, each workplace was a temporary workplace.