Itinerant Workers – Accommodations, travel & subsistence
HMRC often attack claims for travel and subsistence and this has been a source of their interest for many years. A very recent case involving Tim Healy, an actor contracted to the Billy Elliot stage production in London has resulted in some interesting case law becoming apparent.
Tim Healy had been living in Cheshire since 1996 and this was where his family home was and where his family remained. He was offered the contract to perform in Billy Elliot in December 2004, which meant that he would attend 3 months rehearsals followed by a 6 month run on the stage production. The show continued beyond the expected time and he appeared in the show for a further 3 months.
Initially, Tim Healy stayed with friends rent-free but in April 2005 he took on a tenancy on a flat very near to the theatre, amounting to £875 per week. He continued to receive correspondence to his Cheshire and to another address and occasionally travelled back to Cheshire to ‘work’ in his home office on future business plans. His argument always stood that his place of work was the Cheshire home and he ran his business from there.
Tim Healy claimed the full weekly London rental costs in his accounts to obtain full tax relief, up to the period he stopped appearing in the show (despite the tenancy being held for longer as he could only obtain a full year’s tenancy at the time). He also claimed for subsistence (eating out in London) and taxi fares. HMRC firstly disallowed all the claims.
Mr Healy argued that he was in fact an itinerant worker throughout his time in London, even though it was his only job at that time, apart from some small voice-over work in London. He argued also that the reason he took a flat rather than staying in a hotel was because he wanted privacy and security, however, he did not move to London and his family home remained in Cheshire. HMRC argued that he was not an itinerant worker as he had moved to London for the year and so did not satisfy the ‘wholly and exclusively’ test.
The case was taken to the Tribunal and the judge referred to a previous case and noted that the word ‘itinerant’ was not a feature of legislation. The judge precluded that Tim Healy did not ‘live’ in London and his home was indeed in Cheshire. She accepted that there were good reasons to not stay in a hotel and that it was impractical to travel back to Cheshire every day. The judge concluded that the costs of staying in London were indeed incurred ‘wholly and exclusively’ incurred in connection with his profession as an actor. He was not seeking a home in London and so it was accepted there was no duality of purpose.
However, the judge did not allow any of his food costs, as reading between the lines, had he been in a hotel, there may have been necessary inevitable subsistence costs, however, he had full access to a kitchen in his London accommodation. (Unless there were elements that would have been permissible due to cast duties). Also, Mr Healy did not keep sufficient records to substantiate the claims anyway.
Also, the judge said that the taxi fares were not incurred wholly and exclusively and many were between the theatre and social environments, but more importantly very little records very kept and so the taxi and food costs were fully dismissed.
In this case, there was clearly a permanent home in one place and a temporary accommodation in another. Mr Healy is an itinerant worker as he never knows where his work may take him and he may be required to travel, always to different places but this does not form part of his daily routine. I think the accommodation claim was indeed fair but would agree with the view regarding food costs, bearing in mind they were incurred near the theatre (some farther afield) but he could have provided and prepared food for himself. It cannot therefore be wholly and exclusively for business.
This is an area of common review for HMRC and it is important for the facts of each case to be examined in detail before a claim in made. If you have any thoughts, please feel free to share them with us.
Please refer to Healy v HMRC (2012) UKFTT 246 (TC) for more information about the case.