Doctor's employment expenses were unevidenced & unnecessary

In Dr Harry Nduka v HMRC [2023] TC8818, the First Tier Tribunal (FTT) denied claims for employment expenses. The items in question were not necessarily required for use in performing the duties of the doctor’s employment.

During 2016-17 Dr Nduka worked in several NHS hospitals as an employed doctor.

• In December 2016 he was suspended from the medical register for four months by the General Medical Council (GMC) by reason of misconduct.
• In his 2016-17 tax return, he made claims for employment expenses totalling £43,500 which may have included the following items and amounts:
  • Professional subscription to the Royal College of Obstetricians and Gynaecology (RCOG) - £499.
  • Dental costs - £3,000.
  • Accommodation whilst living in hospital accommodation and renting a separate flat - £11,800.
  • Legal fees for disputing his suspension - £27,830.
  • Other costs were disputed as to amount and existence such as travel to attend regular clinics, computer costs, training and child care costs paid to his wife.
• HMRC opened an enquiry into his 2016-17 tax return. He initially provided a list of expenses which did not match his tax return but later refused to respond to requests for a meeting.
• HMRC closed the enquiry disallowing all expenses and Dr Nduka Appealed.
• During the hearing Dr Nduka produced three lists of expenses, settling on the third as correct.
  • Many of the expenses could not be evidenced. The FTT considered each expense despite being unable to confirm, in many cases, the cost of the item, the year in which it had been incurred, or whether it had been incurred at all.

As a result, the FTT denied all but his professional subscription expense which was consistent with his role, despite a lack of evidence about the amount paid. In fact, during the hearing HMRC had conceded the point on this expense due to the RCOG being on its list of allowable fees.

• The legal costs, despite being related to his profession as a doctor, were not actually incurred in the performance of his duties, instead, they put him in a position to continue to carry out his work. As such they were personal expenses and so were not allowable.
• The costs of Dr Nduka’s accommodation were not “wholly, exclusively and necessarily incurred in the performance of the duties”. His employer may have required him to live where he did, but this did not mean living there was ‘necessitated’ by his employment duties. He claimed HMRC had allowed these costs for one property in the past but the court had no information about why that would have been and the law did not allow it for 2016-17.
• The dental costs were personal so disallowable as were the childcare costs.
• Travel costs were for travel to permanent not temporary workplaces so were ordinary commuting and not allowable.
• The cost of a computer if allowed would need to be apportioned for private use but in any event, his contract of employment did not require him to have his own computer and there was no proof of cost or of personal use.

Useful guides on this topic

Accommodation: With travel or temporary workplaces
What cash allowances can be provided for business travel? What qualifies as business travel? What tax relief is available for accommodation?

Legal fees
The cost of legal fees incurred by an employee in taking legal action against their employer can only be deductible for tax in certain circumstances.

Travel (summary for employees)
What expenses can your employer reimburse? How might travel expenses affect Income Tax and National Insurance Contributions? What journeys are allowable for tax relief?

Exemption for paid and reimbursed expenses
What exemptions apply for paid and reimbursed employee expenses? What are the rules?

Fees and subscriptions: List 3 (professional bodies)
What tax relief on professional membership fees and annual subscriptions? What's the legislation?

External link

Dr Harry Nduka v HMRC [2023] TC8818