Business Mileage & Home Office “Habitual” Start Point Journeys

After three Tribunal Hearings, the first of which was in October 2011, a self-employed consultant geriatrician has lost his long battle with HM Revenue & Customs (HMRC) over his business mileage claims.

The First-Tier Tribunal (FTT) has decided that Dr Samadian cannot treat his home as the starting point for calculating his private practice business mileage where ‘habitual’ journeys are involved. This is despite the Tribunal panel accepting that the dedicated office in his home was used for substantive professional work.

The full detailed ruling has yet to be published online, but the HMRC Inspectors are seeking to implement the FTT decision and conclude cases.

What happens next?

Dr Samadian has 56 days to appeal against the ruling made on 28 January 2013.

At the moment, our advice to clients with cases affected by this decision is to wait and see what Dr Samadian intends to do next, unless a mutually acceptable settlement can be negotiated.

Posted in Business Information, Tips | Comments Off on Business Mileage & Home Office “Habitual” Start Point Journeys

Salary Swap For Benefits In Kind

Some benefits are really worth having, such as childcare vouchers or free parking, but they can be expensive for the employer to provide. A solution is for the employee to voluntarily reduce his or her salary by the value of the benefit or some other agreed sum, and the employer pays the benefit directly. The agreement to reduce salary must be made in advance and in writing, perhaps as an adjustment to the employment contract, but this arrangement can work to the advantage of both parties.

Take the example of car parking; which is often in short supply, and expensive, in city centre locations. If the cost of car parking is £10 per day, this adds up to £2,400 for 48 working weeks. An employee on basic rate tax needs to earn £3,582 gross to have £2,400 net after deduction of tax at 22% and NICs at 11% to pay for this parking.

Where the employer pays for a parking permit for the employee to park at or near the place of work, the employee is not taxed on that benefit. Note the parking must be at or near the actual place of work, not at the railway station near the employee’s home.

In this example the employee chooses to reduce their salary by £2,400 and the employer pays for a parking permit. The employer gets a tax deduction for the cost of the permit in its own accounts, and saves 12.8% employers NIC on the reduced salary. The employee now gets this benefit tax free plus the remainder of the taxable salary that wasn’t sacrificed (£1182) so everyone wins – except of course the Taxman!

Posted in Business Information, Tips, Tools | Comments Off on Salary Swap For Benefits In Kind

EORI Number Explanation

The Economic Operator Registration and Identification (EORI) scheme started on 1 July 2009 and replaced the previous TURN system. The EORI provides a unique number for a business to quote to any Customs authority in the EU, for example when the business needs to make a customs declaration when goods arrive or depart from the EU.

If your business had a number under TURN, it should automatically have been issued with an EORI number.

If your business is VAT registered in the UK you will need to complete form C220 to obtain an EORI number, if you are not VAT registered the form to complete is C220A.

Posted in Business Information, Tips, Tools | Comments Off on EORI Number Explanation