If you are a Doctor and pay for your own training costs you may be able to claim a tax rebate.
The rules surrounding what is and isn’t allowable can sometimes be confusing.
An example of one Doctor who was successful is Dr Banerjee whose case was taken to the court of appeal.
A Doctors tax relief claim example
In the case of CRC V Banerjee [2010] EXCA Civ 843, the Court of Appeal surprisingly ruled in favour of the taxpayer who had submitted a claim for tax relief on work expenses, accrued through training costs whilst employed under a training contract.
Case facts:
- Dr Banerjee worked for St George’s Hospital Trust for four years and St Helier Trust for 1 year under the regional organisation (who funded her post) of the South Thames Deanery.
- She was a specialist registrar in dermatology and treated patients in her capacity as an ‘extra’ member of staff.
- A requirement of her job was to maintain an NHS training number throughout her employment. This involved going to assorted training events and lectures. These were sometimes in-house hospital training sessions, sometimes paid for by the hospital and sometimes Dr Banerjee paid the fees and other costs herself. This was part of her employment contract and she would have been sacked if she didn’t meet this training requirement.
- She applied to HMRC for tax relief on these work expenses she incurred herself. This was initially denied and went to the Court of Appeal.
- She was supported by her supervisor at St George’s through a written statement explaining her post as a specialist registrar: ‘… essentially a training post and that the above courses are a condition of their training and thus the duties of the post as dictated by the Regional Deanery. Seeing patients, i.e. the service commitment, is only one aspect of training.’
Banerjee’s argument
Specialist registrar positions are the training vehicle for qualified doctors to become consultants in their chosen field.
This is the main thrust of Banerjee’s lawyer’s argument:
“The purpose of the training contract was to train her as a dermatologist. That was why her post was a supernumerary one. She was being paid a salary to undergo a course with both practical and theoretical elements to it.”
HMRC’s argument
HMRC’s case centred around two key definitions in work expenses regulations:
- If the expenses are “wholly and exclusively” for her job. (ie no personal gain.)
- If the training itself (and therefore the cost) is intrinsically part of “the performance of the duties of the employment”.
It has been notoriously difficult for any taxpayers to convince HMRC commissioners and courts that training costs meet both of these criteria. Indeed, Dr Banerjee failed at her first attempt to claim her training costs as work expenses.
The Court’s Decision
In terms of the “performance of the duties of employment”, the Court of Appeal recognised that the training element of the employment was intrinsically linked to the practical aspect of seeing patients. Together her work with patients and the courses she attended were both her training and her employment.
As Lord Justice Pitchford said: “If the employer requires the taxpayer to spend four days working in a factory and the fifth day, at his own expense and on pain of dismissal, studying in a college, it seems to me unrealistic to deny that expenses necessarily incurred in performing his duty to attend college on the fifth day were incurred in fulfilment of an obligation of his employment.”
In consideration of the “wholly and exclusively” element, the Court of Appeal reframed HMRC’s earlier judgment that Dr Banerjee made personal benefit from the training as the subsequent qualification advanced her career. Lord
Justice Rimer found that this was ‘…no more than that the potential for future professional advancement that she derived from the courses was at most a secondary, or incidental, benefit of her expenditure.’ He also saw that it was nonsensical to make this argument as Dr Banerjee’s expenses were incurred whilst fulfilling her obligations under a training contract and the aim of the role was to move forward to a consultancy role. Basically – if it’s part of the employment contract, then it’s part of the employment duties.
What could this ruling mean in the future?
To some extent, this is a surprise ruling, as it goes against the resolutions to a number of other similar cases. HMRC lays out the regulations for claiming tax relief on work expenses when doctors are employed on a training contract in EIM 32546. It seems very clear, if training is an intrinsic part of your employment contract and you are not reimbursed by your employer, you should be able to claim tax relief on these expenses. Whilst this is supported by the Banerjee ruling, it is also clear that each case is considered on its own merits and evidence will be scrutinized.
Hundreds of doctors miss out on claiming this and other tax reliefs every year – usually because they are unaware they apply to them. MRCP(UK) exam fees, JRCPTB registration fees, membership of professional organisations like the GMC and professional indemnity insurance costs are just some of the common tax relief claims that are available to doctors working in the UK. Given that this could be up to 40% of the total work expenses costs, it’s a battle worth fighting.
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Tony Shanks