Tucked away in the “What’s New” section of the HMRC site earlier this month is the “Technical Consultation on draft legislation for Extra Statutory Concessions”. I didn’t think this sounded too appetising but included in the lengthy list is a note on food, drink and accommodation for the self-employed. It doesn’t happen often but I had stumbled on the answer to an issue that had been at the back of my mind for a couple of weeks. An inspector had been trying to disallow a chunk of the expenses claimed by a local journalist and had taken out all the subsistence as “this isn’t allowable unless there is an overnight stay away.”

That didn’t sound right at all but a quick search on the HMRC website didn’t help much. What a surprise. A few days later I was helping an accountant and Chartered Tax Advisor with a review on whether all possible expenses had been claimed by a self-employed project manager who had been subjected to 3 hours grilling by the taxman. “What about subsistence?” “No…Caillebotte v Quinn.” “I’m not so sure, I’ll get back to you”. I was seeing a recently retired senior inspector for lunch and mentioned this to him, knowing fine well that civil servants get an untaxed day subsistence payment if they are away from the office for over 5 hours. His view was that “the taxman doesn’t get excited about t & s payments as long as they’re not ridiculous.” So now it emerges by way of an oblique reference to an ESC that modest day subsistence is clearly allowable where the business is itinerant or where occasional journeys outside the normal pattern are made.

The list of ESC’s on the website runs to 107 pages; an experienced inspector got it wrong with the journalist and a more experienced inspector wasn’t sure of the position even after reading BIM37660 et seq (which incidentally makes no specific reference to the ESC). My CTA accountant wasn’t aware of the position (although he knew about Caillebotte v Quinn). This may be the leading case but it means the self employed person gets no relief and the employee or director does. Hence the ESC. Even worse, HMRC’s tax return guidance note for the self employed (SEFN 6) says for the travel & subsistence box “..hotel room costs and meals on overnight business trips.”  No mention of other business trips.

So how many legitimate subsistence claims have now been missed over the years through HMRC’s lack of transparency? Perhaps next month we need a note on Error or Mistake Relief………