HOSPITAL CONSULTANTS' BUSINESS BASE - The Debate Sparks Back into Life Following Recent Appeal

At first glance, Paul Mellor’s recent Tribunal victory was nothing to write home about. Mellor, a self employed electrician living in Ruislip, successfully argued his home was his business base and won his appeal against an increased amendment to his self assessment, in which HMRC had disallowed a proportion of his motor expenses. HMRC had contended Mellor’s home could not be considered to be his business base.

Mellor travelled from his home to the various sites he was engaged to work at and claimed business mileage when he closed his front door and got into his car to set off for work. The majority of readers familiar with this subject will immediately recognise that Mellor should have won because of the precedent set by the Horton v Young (40TC60)  tax case. As usual, HMRC sought to apply the factors featured in the Newsom v Robertson (33TC452) tax case.

What is interesting about this victory is the thinking behind the Tribunal’s decision. 

The Tribunal established Mellor had no separate office outside his home, prepared his quotes and undertook preparatory work at home, as well as kept his business records at home. All of his business correspondence was sent to his home. HMRC recognised work was undertaken at home, but argued that did not make it an office or the business base.

The Tribunal found in favour of Mellor by concluding that as the tools and business records were kept at home and that Mellor examined plans and drew up quotes at home, the trading activity did not cease when he arrived back home.

This victory potentially reignites the whole debate about what constitutes the business base for all trades and professions, but in particular Hospital Consultants.

If the Hospital Consultant has no separate office space available in the private hospital/clinic, keeps their business records at home, organises their work from home, undertakes research and perhaps conducts initial examinations or treatments at home, has business correspondence sent to the home and works at home in the early mornings before leaving or late evenings after returning, surely this case is more of a relevant precedent than Newsom?

The Tribunal noted that Newsom’s base was his chambers and, although he kept some law books at home, they were a duplicate of the books he had available in his separate chambers.

The full decision can be found at :-

http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=5275

HMRC has 56 days from the decision being made to appeal against the Mellor outcome.