Taxi driver income query

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    I have an appeal from a guy about how his self-employed earnings have been calculated. He is appealing against quite a lot (!) but 2 of his points have me scratching my head.

    1) He says his firm insist on him wearing a suit and tie (fair enough) but he has decided to have his suit dry-cleaned once or twice a week and wants the £700 he pays each year taken as a business expense.

    Seeing as this isn’t a specific “uniform” (such as worn in Tesco’s for example) and it’s his choice to get suits dry-cleaned I’m inclined to refuse this bit but can’t find a Regulation – any ideas?

    2) He wants his parking fines allowed!! He says these are a business expense as he wouldn’t have received them if he wasn’t working as a cabbie. I don’t agree with this, not least because a) if they are allowed his HB increases and we are paying his fines for him and b) seeing as fines are a punishment for breaking the law how can we condone this by taking as an expense.

    Any ideas??


    HB Reg 38(7) is what you are looking for I think. This gives a power to refuse expenses not reasonably incurred. No doubt others can weigh in with caselaw if the interpretation of “reasonable” has ever been tested.

    Obviously it could be argued that it would be reasonable to park legally and thus avoid incurring the fines, but that should, I suppose, be seen in the light of what parking is like round your way!

    Cabbies in my area don’t generally have to be that well turned-out, but maybe it would be less expensive to buy a second suit….or would that be capital expenditure?…oh god…..!


    Remember that we are talking about “legitimate business expenses” here -reg 38 7 states that “The relevant authority shall refuse to make a deduction in respect of any expenses………. where it is not satisfied given the nature and the amount of the expense that it has been reasonably incurred.”

    Is it reasonable to get parking tickets – not if you park correctly.
    Is it reasonable to have a suit dry cleaned once or twice a week – I would argue that this is excessive.
    I would allow neither of these items (though maybe it would be reasonable to allow dry cleaning costs less frequently?) and inform him of his right to appeal should he not agree with your decision, guvnor. 8)

    Darren W

    Will have a go….

    Point 1
    Regulation 38 (7) allows us to limit the amount used if we think that it is unreasonable. My take would be he is sat in a car, how dirty can the suit get? I would allow some of the cleaning costs say once a month, but not once or twice a week.

    Point 2
    I would be tempted to use Regulation 38 ( 8 )(a).

    [i:446702ec28]The relevant authority shall refuse to make a deduction in respect of any expenses under paragraph (3)(a) or 4 where it is not satisfied given the nature and the amount of the expense that it has been resonably incurred. [/i:446702ec28]

    I would say that allowing himself to get a parking ticket is not a resonably incurred expense so would not be allowable.


    I agree with previous comments about excessive dry – cleaning bills – does he sevice the car in his suit?

    Have you considered 38(3a) – ‘wholly & exclusively incurred for that employment’? If I have to wear a suit at work (I don’t), I would not be able to claim the cost of these as an expense because HMRC would say I could wear them outside work. Could not the same argument be used for your taxi driver?


    Slightly off on a tangent, but I would be interested to know if the difference in wording between reg 35(2)(b) and reg 38(3)(a) of the HBR 2006 is deliberate. For employed earners, the expense must be “wholly, exclusively and necessarily” incurred, whereas for the self-employed the “necessarily” is omitted.

    This seems to create an obvious anomaly – if an employed earner had to buy a suit and tie for work because that was the employer’s dress code, it could be refused as an expense, because the dress code is simply a corporate preference rather than a necessity. The smartly-dressed self-employed cabbie, on the other hand…

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