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Hotel a home for business

While moving between homes, a taxpayer wants to claim hotel expenses as a cost for their business as they use their home as an office, one of the Croydon and South East London Tax Discussion Groups hears.

March 2018

At a recent Tax Discussion Group meeting, an accountant raised the issue that their client had recently sold his home and moved temporarily into a hotel for a fortnight before occupying their new apartment. She explained that they had been claiming for the use of their home as their office. Her query was whether the client could claim for the hotel accommodation and if so how much of the hotel costs and subsistence could they claim?

The discussions were wide ranging and of a practical nature. They covered whether those attending would accept that there was at least a part of the costs incurred in such circumstances would be eligible travel and subsistence claims and able to offset taxable income received by a sole trader.

Some of those attending felt that the hotel accommodation would not be allowable as a tax deduction whatsoever if it replaced their home for a temporary period. The grounds being that there was no “home” at the hotel, and that the hotel accommodation was not “travel” on business.

It was felt by them that if there was a possibility that hotel accommodation in such circumstances would even in part be allowed, then this would enable tax payers to claim for holiday costs if they used part of their holiday accommodation for any taxable work.

Others explained that they used the simplified tax expense deductions for use of home, and that they would claim for a full year. The basis for this being that the flat rate expense is an allowable expense accepted by HMRC for the use of their home as their business premises. In this instance the hotel replaced their home temporarily.

The accountant explained that the client was actually seeking to claim all of the costs incurred as they were not at “home” and that they had used the hotel in part for business purposes. She explained that they had previously claimed for one quarter of their home utility bills as a deduction.

It was felt by all attending that this, on the facts presented, was an excessive claim.

Each month (with the exception of July and August) the Tax Discussion Groups [TDG] in Croydon and South East London meet to discuss client tax issues on a no-names basis. These meetings are free to attend and normally cover over a dozen tax issues raised by those attending.

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