Early Years Expense Claims for Locums
When a locum doctor starts self-employment and starts to think about business expenses, they often consider expenses incurred in earlier tax years. Our locum doctor clients have trained over several years. During this time it is common to have never completed a tax return and never to have claimed a tax rebate in respect of professional fees and subscriptions. Often a doctor will have paid subscriptions to the GMC, the BMA and to a professional indemnity insurer over several years.
Depending on individual circumstances, a significant tax rebate is often due. It is possible to make a tax rebate claim up to four years in arrears.
Claiming Expenses against Tax
In order to make a claim for tax relief the expense must be incurred “wholly, exclusively and necessarily in the performance of the duties of employment”. This has traditionally restricted the types of expenses that an employee can claim to subscriptions and business mileage. However, a recent tax case, HMRC v Banerjee, has opened up the possibility for a registrar to be able to also claim for course and training costs.
The practical difficulty with making these claims is that the doctor may not have details of the professional fees or subscriptions paid over the past four years. However, this information can usually be obtained from the relevant professional body.
Word of caution
When a claim of this nature is submitted this automatically leads the Revenue to recalculate the PAYE deducted in earlier years. If, therefore, you have changed jobs at any time in the previous tax years or if your employer has operated an incorrect tax code then it is possible for a taxpayer to find themselves with an additional tax liability rather than a tax refund.
If you are not completely sure that the Revenue have already reviewed the earlier years then we strongly advise against submitting a claim of this nature without first asking us to calculate if there is any underpayment that you are not aware of.
You will know that the Revenue have looked into an earlier year if they have sent you a form P800 or a claim for payment or refund for a particular year.
How we can help
We help by advising the doctor what professional expenses are tax deductible and advising the best way to claim the tax rebate. We often provide a pro-forma letter for our clients to complete and submit to HMRC themselves.