The question of tax-free employee travel expenses arises frequently and has been the subject of many cases in the past. The key requirement is that the expense be “wholly, exclusively and necessarily” incurred in the performance of the duties of the employment.

There have been many changes in work practices in recent times, particularly due to Covid-19. Advances in information technology enabled a recent Tax Appeals Commission case useful in this context.

Facts outline

• The appellant was a company owned by its director and sole employee
• It provided specialist IT consultancy services to UK financial services providers
• The director received payments relating to travel from his home office to different UK client sites (an average of 45 trips annually with a typical duration of two days)
• Client contracts specified that the services would be provided from Ireland

Revenue contended that the trips were made to a normal place of work and as such were not allowable as tax-free expenses. They based their case on the oft-quoted UK precedent of “Ricketts vs Colquhoun” also known as the “Recorder of Portsmouth” case, in that case the taxpayer:

• Was a barrister who was residing and practising in London who was appointed as the Recorder of Portsmouth, a type of magistrate part-time position.
• The office obliged him to travel to Portsmouth four times per annum,
• He claimed expenses of travelling to and from Portsmouth and his hotel expenses in Portsmouth.

It was held:

• That the expenses were not incurred in the performance of his duties but partly before he entered upon his duties and partly after he had fulfilled these duties.
• The fact that a person chose to live away from his employment was a personal matter
• Therefore, the travel was not an expense of employment and so the payments were taxable

Basis of Appeal to the Revenue Commissioners

In the current case, the IT consultant (appellant) argued that:

• the home office was the normal place of work and that was where the services required by clients was carried out
• the purpose of the UK trips was to meet with stakeholders and getting future business.

Conclusion
The IT guy won! On the following grounds:

Ricketts vs Colquhoun referred to travelling to a place of employment. The appellant had no employer/employee relationship with the client companies.

We hope you find this information useful. Please reach out if you have any queries regarding this blog, or indeed, if you require any tax advice.