< Go Back No Evidence - No Deduction - Mileage Claims Rejected Posted: Jun 1, 2021
the First Tier
Tribunal (FTT) denied claims to deduct employment-related
expenses due to a lack of supporting evidence. Derek Storey v HMRC  TC08090,
Storey, an employed scaffolder, submitted unsolicited tax returns
to HMRC for the 2014-15 to 2016-17 tax years inclusive,
claiming deductions totalling £31,890 from employment income.
HMRC opened an enquiry into each return and requested supporting evidence for the
expenses now claimed.
After providing a schedule of mileage and expenses, Mr
Storey’s agent advised mileage
claimed was to the best of Mr Storey’s memory. HMRC issued closure notices, assessing Income Tax of £12,998: Omitted and relevant Cat and Car Fuel benefits were added to the 2015-16 return. Mileage claims calculated at the authorised mileage rates were removed, there was no evidence to support them. Subsistence claims of £1,875 per year were denied as it was not possible to establish that there was any allowable travel at all. A Flat Rate Allowance of £140 per year was allowed in respect of tools. No receipts had been provided. Accountancy fees were disallowed; they were not incurred in the performance of Mr Storey’s duties. On the basis that the disclosure was prompted and Mr Storey had been careless, a penalty of £2,340 was charged. On review, HMRC upheld their decision. Mr Storey appealed to the FTT.
The FTT agreed with HMRC’s decision, finding that:
60,000 business miles
were claimed to be driven in Mr Storey’s personal car between April 2015 and June
2017; the MOT records for the vehicle showed only 38,458 miles being covered in the period.
Mr Storey had use of a company vehicle in this time. No explanation was offered for him using his own vehicle instead. The mileage ‘log’ only recorded monthly totals, not individual journeys or dates. As no alternative evidence of business
journeys was provided, it was impossible to determine what mileage was
undertaken by Mr Storey in the performance of his duties of employment, therefore, no deduction could be allowed. No evidence of subsistence was provided, there was no proof of temporary work locations. There was no
evidence of costs being incurred on tools. No related deductions for these items could
The FTT expressed concern that HMRC had not published detailed
guidance for employees on how to keep records and the types of evidence
that should be submitted by employees in this situation, who may have
allowable expenses and in the absence of such guidance, it was not possible to apportion
blame for carelessness entirely to Mr Storey. The FTT suspended the penalty for carelessness, subject to the condition that the remaining tax liability was settled.
In the absence of supporting information of any kind the FTT has few options, especially as the levels of mileage claimed greatly exceeded the total mileage of the vehicle in question in the relevant period. Many advisers would suggest that Mr Storey was very lucky as regards the penalty point.
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