Srange one, I have a client who works on an island in the north of scotland for months at a time. He is a self employed farm hand (the self employed bit is very questionable) he has recently bought a caravan to live in while there and wants to put it through he business. My gut says no, he would need to live somewhere. It doesnt seem much differen to an employed person living away o work mon-fri and coming home at the weekendsm, and you couldn't get the public purse to subsidise that (well, unless you're an MP)
I can see the workers logic in that the caravan will prove less costly than B&B which no doubt they have been claiming to date.
On that point, remember that if a self employed person or director expects to work at a site for more than two years (even if they don't eventually end up working at the site for more than two years) then as soon as such is believed to be true accommodation expenses would not be allowable.
Even where there are breaks in the employment such as for seasonal work if it is the same employer HMRC may join the periods of work together.
Looking at this from the other perspective of this being an asset of the business rather than an accommodation cost per se you have another issue in that the asset is on an island and to all intent and purpose can be regarded as pretty much fixed there as it will never come off that island.
That aside though, if it has wheels and can be moved whether it is or not, then capital allowances would be allowable as it is not a fixed structure.
But, whilst it can be argued that the caravan is wholly, necessarily and exclusively for business purposes the facts of the case are that the worker is in all probability an employee in all but name and in the event of an investigation all of the business expenses could be unraveled leaving the taxpayer with a pretty hefty bill.
I would advise your clients that they need to find more customers to work with, to not take any contract of more than two years or extend any existing contract beyond two years and to ensure that the caravan is moved from site to site. If they can meet those criteria then capital allowances would be available against the caravan (as aI say, assuming that it has wheels on it) as well as other expenses synonymous with staying away from home being allowable.
Sure that I've missed some important pointy there but hope that helps for starters,
all the best,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I initially thought no as well. However, if he was employed it could easily be argued that it is customary to provide the employee with accommodation and so it could be argued that it is "job related accommodation" as actually living in site can be a requirement of farm work.
There is also the wholly and exclusively test, and whilst it doesn't have to be necessary, if he doesn't use it for personal use i would be more tempted to allow it.
It theoretically is no different to him giving you receipts for hotel receipts.
Although the fact that he is away for months at a time makes me think it is a bit iffy.
It is a difficult one though.
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
So he's already in at least the second year. Maybe time for a motivational speech that unless he finds at least one more client then all of his travel and accommodation expenses are down to him rather than his business.
I like to think that clients listen when we point out that they are going to lose money but at times I think that they just hear white noise interference.
If they read this they would know who I was talking about so I can't say on here what I told someone not to do, repeatedly, even to the point of phoning them and reminding them not to do it (I also emailed them so as to ensure that I had myself covered with something in writing that they had replied to).
Guess what, they brought their books in last week and they had done exactly what I told them not to and they are going to end up with a pretty hefty tax bill on the back of it and the only way that I can see them being able to pay it is by maxing out personal credit cards as the cash needed to pay the tax is buried in an asset that they are not going to get capital allowances on.
Somehow I told you so just doesn't quite say it strongly enough.
I'm going to give up on the banging my own head against the desk and just start banging their heads against my desk.... Gives me less of a headache and great for stress relief.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
