What can be claimed as mileage when self employed?

evosy1978

Is it not possible for me to go the mileage route for the last 3 years, get all my mileages recorded and up to date, and phone up HMRC and tell them I put £1800 in the capital allowance box 3 years ago and it should of been in the allowable expenses box and also £1100 in the capital allowance box the next year and this should of also been in the allowable expenses box???


As a rough example, my earnings are about £25000 p/a and my expenses are about £3700... so im not a big earner... and usually get about £600 in a tax rebate.

thanks... ( I will be going to an accountant sooner rather than later)

chrismac1

Well let me put it this way. I have a client who three years ago rang up HMRC to sort out a few issues on her tax returns whe was doing herself. The reason she is my client is she ended up with an £1,800 bill - £1,700 of it incorrect - and being threatened with bailiffs. I got the £1,700 back simply by doing her accounts and tax properly and re-submitting the returns. The big mistake was in assuming:

1. That HMRC are on your side, they are not.
2. That people on the helplines know about tax law, they do not.

evosy1978

Your right I agree, there not your friends...

So am I right in thinking there is nothing I can do about these two errors and its just a case of hoping the HMRC dont inspect me. ..

jimmo

Are you sure you want to do this without seeking professional advice?
You should not be surprised that I, as an ex taxman, take the opposite view to a lot of the advice you have been given above.
.
As taxing indicated, the extra few miles you travel each day are allowable, but I rather think that your 150 mile round journey is normal commuting and not allowable.
You should also bear in mind that if you go ahead with your claim it is not just a matter of giving it a go and see what happens. If HMRC make an Enquiry you are very likely to be out of your depth and if HMRC refuse your claims you will have to pay any outstanding tax, interest and a penalty for making a false Return or Claim.

On the basis of what you have said I suggest you look at the case of the milkman in the HMRC staff manual.
http://www.hmrc.gov.uk/manuals/bimmanual/BIM37635.htm
Admittedly that case is from 2004 whereas chrismac 1 seems to know of a later Tribunal case.
If you want to go ahead with this then it is entirely feasible to correct your previous Returns, subject to time limits.
http://www.hmrc.gov.uk/sa/correct-repay.htm
I wouldn't claim to be definitely right but I would suggest that there is sufficient doubt for it to be dangerous for you to take it on by relying on a forum and not seeking professional advice.

chrismac1

I have found the case, it is Mellor v CRC UKFTT 29 TC from 2011 (!!) and concerned a self-employed electrician who won his case. I agree with jimmo that on the mileage alone you should get professional advice, at least you can claim on Professional Indemnity Insurance if it turns out badly. Also I would get fee protection insurance so you can fight your corner if HMRC come out fighting. Plus a qualified accountant should be able to take a sensible view on the overall impact of your historic returns compared to what would have taken place if they'd been completed "correctly" - bearing in mind that a set of accounts - from the smallest trader up to HSBC, Vodafone etc. - is an OPINION not fixed in concrete and hence always contains some room for wriggling! You want someone who agrees to do this on a pragmatic basis - ideally fixed price - not the sort of guy who just sees the chance to burn a load of hours on the old files and charge you for it.

chrismac1

Two other cases from 2011 where the taxpayer has successfully beaten down HMRC over travelling costs and the Tribunal have accepted "itinerant worker" arguments:

1. Reed was a scaffolder from Grimsby working in Birmingham, costs of his rental "digs" were allowable.
2. Kenyon was a pipe-fitter travelling from Merseyside to Greenwhich, Tribunal held that he'd worked at various sites in the Greenwich area in the period and hence Merseyside was his valid home base.

All of these cases are in the construction sector, all no doubt arising because people have to travel to find the work. They each turned on individual circumstances of the case. In your position I would seek to operate my contract in such a way that as much as possible was happening - and seen to be happening - from my home, and as little as possible at my "employer" s place of business. At the very least these 2011 cases are a big warning shot across the HMRC bows, if you or your agent cites them in the event of an enquiry at least the Inspector knows no-one is going to roll over and die!