The tax rules for employed for claiming working from home expenses are different. Though you can claim for gas, electricity and water expenses, it would not be in the same way as a self employed person. Your bills, insurance and mortgage repayments are seen to be fixed anyway as they are your usual household bills regardless of whether you work from home or not. You can therefore only claim for the extra energy that you have used and not a percentage of the overall costs. You cannot claim relief for the cost of your telephone line rental or internet access as you would have them for personal use anyway. You can however, ask for a deduction for the cost of the calls made on behalf of the business. A reasonable and acceptable amount to ask for would be about £3 per week plus the cost of business calls on top. If you did want to claim more than this then you will be asked to prove that your household bills have increased (by the figure you have asked for) due your work. You can potentially claim these expenses dating back several years depending on what you have stated on previous (if any) Self Assessment Tax Returns.

The HMRC tends to like these expenses to be paid by the employer as opposed to them, as it is a mutual agreement between yourself and your employer that you work from home. If however your employer refuses to pay then there are other certain criteria that must be met, and if any of these requirements are not met then no relief at all will be given.

• First and foremost that you must show that you have no alternative choice but to work from home. As stated in the HMRC Tax Bulletin Number 79,

“there is an objective requirement that those duties should be carried out at the employee’s home and nowhere else.”

• There is a very fine line with this rule and if the employee has even the slightest choice, they will not be given any form of relief. For example it is acceptable if your employer’s premises are too far away for you to be reasonably expected to travel there on a daily basis providing that you did not have a choice in this, i.e. by moving further afield, excepting a job too far away or turning down an offer to relocate you.

•  The work you carry out from home must be “all or part of the central duties of employment”.

•  You require certain hardware/software or other facilities that are not available at your employer’s premises.

So to summarise, tax deductable expenses for working from home can be claimed providing that they are realistic, that you meet certain strict criteria and that your employer does not already pay you for these additional costs you incur due to your job. Please ask a trained accountant if you require additional information or clarification as to what you can claim.

Written by Becky Drummer-Jones

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HMRC can at any time request to visit your business premises to inspect your “VAT, customs and excise duties records”. And if you claim expenses for working from home then they may well request to visit you there. However, you do have the option to arrange the appointment at alternative venue and it is normally recommended that this takes place at your accountants office. If they are adamant that your home or business premises is the place they want to visit you at then they must have a specific reason for this and there are certain rules they must abide by:

• They can only “inspect” the areas of your home that are used for business.
• You can request they leave at any time but they will want to know your reasons for wanting this and also to arrange another visit. If you refuse this then it could lead to further questions and possible penalties ranging from £60 per day up to £3000.
• They have the right to “inspect” your premises, not “search”. Meaning that they can not specifically hunt for things to go against you. They can only look at the records they have requested, to check that all is in order.
• They have the right to look at business records but not to question/interview employees to find out more information.
• They can request information on the personal financial position of the proprietor/director of the business to check that their position is in line with the taxes being paid, but once again they cannot go “fishing” for extra information.
• As a general rule, they cannot remove documents from the premises without your agreement, they can only make copies or take extracts. But there are some documents that they do have the right to remove such as “legally privileged papers, tax advisors papers and appeal material”.  If they do remove anything from your property then you must make sure you get a full and detailed receipt of exactly what has been taken.

Though the HMRC can make unannounced visits, they usually provide you with either a phone call or letter seven days prior to their visit. In that notification they will state exactly when and where they will be visiting you, the name of the visiting officers and what documents they are coming to look at.

Once at your premises, they cannot demand to see extra documents that were not stated in the original notification. They would have to arrange another appointment for these. However if they find anything useful or unusual relating to another area in the documents they already have permission to view, then they can pass this information for further investigation.

The things they will usually be looking to review are things like your receipts, expenses of the business, sales and purchase records as well as possibly your PAYE and VAT files. They may also check equipment, raw materials and products produced. This is to make sure that all of these areas are relative to each other and that you are not claiming fraudulently. These inspections can take anywhere from a few hours to several days depending on the size of your business.

It is always a good idea to cooperate with the HMRC when they want to visit as though you can negotiate when and where the meeting will take place, you can never actually stop them from coming at all. And it is best to be prepared for them, than to have them make an unannounced visit which they would inevitably do if they are constantly turned away. You do have the right to refuse them entry but this could result in deeper investigations and if you have nothing to hide, then you have little to worry about.

Written by Becky Drummer-Jones