Car Tax Allowances - the latest from Her Majesty’s Revenue and Customs (HMRC)
November 2009
Further meetings and exchanges have been held between the HSCA, FIPO, the two specialist accountants, Messrs Andrew Lang and Ray Stanbridge with the HMRC, the last meeting being on May 28th 2009. It was hoped that guidelines would be issued to assist consultants and their accountants over how to claim for car expenses in relation to private practice. However, this has been delayed as there is a case currently going before the commissioners which hopefully will clarify some issues. In essence the issue continues to revolve around the definition of a consultant's home as a working office. Unfortunately, FIPO hears of several current cases in which HMRC are pursuing tax claims going back over many years.
Our advice is for all consultants to discuss this with their accountants and to be prepared to justify their private practice travel arrangements if questioned. Further information will be forthcoming hopefully in the New Year.
Background - August 2008
The Chief Executive of the Hospital Consultants and Specialists Association (HCSA), Mr. Stephen Campion and the Chairman of the Federation of Independent Practitioners (FIPO), Mr. Geoffrey Glazer with two specialist accountants Mr. Andrew Lang and Mr. Ray Stanbridge held talks on Wednesday 20 August with senior managers of Her Majesty’s Revenue and Customs (HMRC).
The meeting was requested in order to seek clarification on the tax rules that apply to expenditure on business travel by hospital consultants engaged in private practice. The delegation raised a number of issues with HMRC which included the inconsistent application by differing tax offices of the rules relating to travel expenses. HMRC acknowledged their inconsistency and are correcting that by issuing guidance to all staff working such cases.
Concern was also expressed about media reports that HMRC intended to recover potential tax liabilities going back 20 years. HMRC reassured the delegation it had no general plan to recover tax liability for consultants over the past 20 years in relation to non business motor expenses save only in the most extreme cases. This news was welcomed by the profession’s representatives, although quite what constitutes “extreme cases” has yet to be clarified.
During the discussion it became apparent to both parties that further work needed to be done about how mileage “wholly and exclusively” undertaken in the fulfilment of private practice should be determined. HMRC recognised that working practices may differ between medical specialties, and that use of technology and location of a practitioners work may influence the calculation of what may, or may not, be allowed against tax. The delegation and HMRC agreed to meet again as soon as possible to continue discussions on these points.
Commenting on the meeting Mr. Campion said that it had been useful in clarifying areas that had clearly worried consultants and their accountants. “HMRC showed a willingness to listen to the points made and I am pleased that we were able to have a constructive dialogue at a high level. We look forward to further talks later this year” he concluded.