EXPENSES - 29.03.2007

On-call commuting II

PAYE enquiry

Recognisable scenario. A subscriber recently had a PAYE enquiry which passed off without any major problems. However, one niggling issue did arise. One of the directors/senior employees had been called out to the company’s premises to deal with emergencies during evenings or weekends. They usually commuted to work using public transport, however the nature of the emergencies and the weekend train timetables meant that it was more appropriate for them to drive in. The company therefore reimbursed them for their motoring expenses using the Taxman’s approved mileage rates.

Problem. The inspector conducting the enquiry has now written to our subscriber with the suggestion that such payments are, in fact, taxable, as they are for journeys that represent ordinary commuting. Is he right?

Ordinary commuting

Harsh line. The journeys undertaken by the director/senior employee are to their normal place of work. Ordinary commuting is defined as including travel between home and a permanent workplace (s.338(3) Income Tax (Earnings and Pensions) Act 2003). There’s no reference to whether the journey takes place by the normal method of transport or at an unusual time. In fact “Travel for necessary attendance: emergency call-out and stand-by: emergency call-out:” is classed as ordinary commuting in his manuals (Employment Income Manual paragraph 32240).

Your problem? Since the company failed to apply PAYE correctly, the liability to account for any income tax and NI due, together with interest and penalties, will fall on the company, not the director/employee. Ouch!

Extraordinary commuting is OK

However, all is not lost if the director/employee is also obliged to perform duties at home. Here, three conditions need to be satisfied under s.337 ITEPA 2003. First, the employee must advise on handling the emergency before commencing the journey. Secondly, responsibility for those aspects appropriate to the employee’s duties is accepted from that time. And thirdly, the employee has a continuing responsibility for the emergency whilst travelling to the workplace.

Tip 1. Had there been more than one workplace, the situation might mean some extraordinary commuting and thus some allowance. If you can, make sure that the site they are being called out to isn’t their permanent place of work.

Tip 2. Get the Taxman’s conditions clearly spelt out in a contract of employment as follows:

“(The employee) remains responsible for the emergency whilst on call where it is possible to do so safely. The employee should be available on their mobile phone. If that is not possible, they should stop and ring in if (1) they anticipate that further advice is needed before they reach the workplace; or, (2) they are going to arrive later than anticipated.”

Finally. Remember that the Taxman’s manuals are not the law; they are a matter of opinion as to how he interprets the law.

The next step

For a copy of our previous article on call-outs, visit http://tax.indicator.co.uk (TX 07.12.06).