In Mr Nwaneri v HMRC [2026] TC09844, the First Tier Tribunal (FTT) found that Mr Nwaneri was not entitled to deduct travel and subsistence expenses claimed in his Self Assessment returns and that inaccuracies in those returns were deliberate, such that HMRC's amendments and penalty assessments were upheld.
This appeal concerned HMRC's disallowance of Travel and Subsistence expenses and the imposition of penalties for deliberate inaccuracies across three tax years.
Mr Nwaneri was a full-time locum doctor who had worked in the UK since around 2010 and, following changes to IR35 legislation, filed his own Self Assessment tax returns from 2017-18 onwards. Before this, he had an accountant who filed his Self Assessment tax returns.
- During the tax years 2019-20, 2020-21 and 2021-22, he worked at a few NHS Trusts, including Southport & Ormskirk NHS Trust (NHS Southport) and Shrewsbury & Telford Hospital (NHS Shrewsbury), providing services via the employment intermediary Interact Medical Ltd.
- In March 2022, after submitting overdue Self Assessment returns in bulk, Mr Nwaneri claimed substantial travel and subsistence expenses, amounting to £54,630 (2019-20), £43,480 (2020-21) and £64,010 (2021-22).
- HMRC opened enquiries in January 2023 and requested supporting documentation, including contracts, mileage evidence, receipts and bank statements. Very limited evidence was provided and Mr Nwaneri stated that invoices and records were unavailable due to the passage of time.
- HMRC identified that the claimed expenses were extremely high relative to Mr Nwaneri's income and noted multiple inconsistencies, including claims for mileage and subsistence based on working patterns that exceeded seven days per week.
- Provisional findings issued by HMRC highlighted discrepancies between the figures declared in the tax returns and later spreadsheets provided by Mr Nwaneri, as well as implausible mileage claims when compared to DVLA MOT data for his vehicle.
- In April 2024, HMRC issued Closure notices amending the returns to disallow all travel and subsistence expenses and issued penalties under Schedule 24 Finance Act (FA) 2007 for Deliberate behaviour.
- Following an internal review, HMRC upheld the closure notices and penalties (with minor variations to amounts), maintaining that Mr Nwaneri's behaviour was deliberate rather than careless.
- Mr Nwaneri Appealed to the First Tier Tribunal (FTT), arguing that he was a locum working temporary assignments, that his expenses were legitimate, and that any errors were mistakes rather than deliberate conduct.
The FTT found that:
- The enquiries into the Self Assessment returns were validly opened within the statutory time limits under Section 9A (s.9A) Taxes Management Act (TMA) 1970.
- Mr Nwaneri provided his services through an employment intermediary, so s.339A Income Tax (Earnings and Pensions) Act (ITEPA) 2003 applied, meaning each engagement was treated as a separate employment for travel expense purposes.
- NHS Southport and NHS Shrewsbury were workplaces that Mr Nwaneri regularly attended and, applying s.339 ITEPA 2003 and the reasoning in Mainpay Ltd v HMRC, each assignment constituted a period during which he attended the workplace for all or almost all of the employment.
- As a result, neither NHS Trust was a temporary workplace; both were permanent workplaces for the purposes of the relevant employment. Travel from Mr Nwaneri's home to those locations, therefore, amounted to ordinary commuting and was not deductible under s.338 ITEPA 2003.
- Subsistence expenses were not deductible because Mr Nwaneri was not obliged, as a term of his employment, to incur them. It could not be said that the food and drink were incurred wholly, exclusively and necessarily in the performance of employment duties.
- In any event, the tribunal was not satisfied on the evidence that the claimed travel, mileage or subsistence expenses were actually incurred in the amounts claimed, given the absence of receipts, bank statements or credible corroborative records.
- The tribunal accepted HMRC's case that the returns contained inaccuracies that understated Mr Nwaneri's tax liabilities and that the statutory threshold for penalties under Schedule 24 FA 2007 was met.
- Applying the tests in Auxilium and Tooth, the tribunal found that the inaccuracies were deliberate. In particular, it was noted that there were impossible working assumptions (such as claiming expenses for more than seven days per week), exaggerated mileage vastly exceeding the vehicle's recorded annual mileage and internally inconsistent figures between returns and spreadsheets.
- Taken cumulatively, the evidence showed that Mr Nwaneri knowingly submitted inaccurate figures with the intention that HMRC would rely on them, even if dishonesty was not alleged or required to be proved.
- The penalties had been correctly calculated, appropriate reductions for disclosure had been applied, and there were no special circumstances to justify further mitigation.
The FTT dismissed the appeal in full.
Useful guides on this topic
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?
Travel (employer's guide)
How do employers apply the tax rules to travel costs? What is available for subsistence costs? What are the rules on home-to-work travel?
Subsistence (summary for employees)
Can employees claim tax relief for subsistence? How do you make a claim?
Subsistence (employer's guide)
What subsistence costs can be claimed? What are the rules for employer intermediaries? How do claims affect VAT, National Insurance Contributions (NICs) and Income Tax?
Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights?
Penalties: Deliberate Behaviour
What penalties apply to deliberate behaviour? What is deliberate behaviour?
How to appeal an HMRC decision
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
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