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HMRC internal manual

Business Income Manual

Wholly and exclusively: expenditure having an intrinsic duality of purpose: travel between home and work

S34 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005)

Object of travel is to enable the taxpayer to live away from his work

You should disallow a trader’s cost in travelling from home to work except in the case of an ‘itinerant’ trader.

The facts in Newsom v Robertson [1952] 33 TC 452 are set out in BIM37605.

Romer LJ succinctly explained why the costs of home to work travel in that case were not allowed on page 465:

`In other words, the object of the journeys, both morning and evening, is not to enable a man to do his work but to live away from it.’

There is an inevitable and unavoidable private purpose in journeys between the place of work and the place of abode. In Newsom v Robertson, Denning LJ drew a distinction between living expenses and business expenses. Denning LJ explained that a finding that the taxpayer carried out professional work both in their office and at their home did not change the essential private nature of the journey between the two. Notwithstanding that the barrister in Newsom undertook significant work at home, that was no more the base of his operations than was the train that took him between home and chambers.

A stop over on the journey between work and home does not convert the essentially private journey into a business journey. At best it makes the journey dual purpose and therefore falls foul of S34(1)(a) ITTOIA 2005 (see Sargent v Barnes [1978] 52 TC 335, BIM37630).

The part of Denning LJ’s judgment where he explained why the expenditure was not allowable is on page 464:

`A distinction must be drawn between living expenses and business expenses. In order to decide into which category to put the cost of travelling, you must look to see what is the base from which the trade, profession, or occupation is carried on. In the case of a tradesman, the base of his trading operation is his shop. In the case of a barrister, it is his chambers. Once he gets to his chambers, the cost of travelling to the various courts is incurred wholly and exclusively for the purposes of his profession. But it is different with the cost of travelling from his home to his chambers and back. That is incurred because he lives at a distance from his base. It is incurred for the purposes of his living there and not for the purposes of his profession, or at any rate not wholly or exclusively; and this is so, whether he has a choice in the matter or not. It is a living expense as distinct from a business expense.

On this reasoning I have no doubt that the Commissioners were right in regard to Mr Newsom’s travelling expenses during term time. The only ground on which Mr Millard Tucker [taxpayer’s counsel] challenged their finding during term time was because Mr Newsom has a study at his home at Whipsnade completely equipped with law books and does a lot of work there. The Commissioners did not regard this as sufficient to make his home during term time a base from which he carried on his profession, and I agree with them. His base was his chambers in Lincoln’s Inn. His home was no more a base of operations than was the train by which he travelled to and fro. He worked at home just as he might work in the train, but it was not his base.’