In practice, HMRC tend to allow the costs of overnight accommodation on short business trips, and longer stays by site workers, but seem to consider that accommodation lasting for longer than a few months is not allowable. However, the tax tribunals have made it clear that duration of stay is not necessarily a factor.
A relatively recent case involving a claim for accommodation costs is Healy v HMRC. Mr Healy lived in Cheshire, but was cast to play Billy Elliot’s dad in the West End musical, so rented a flat in London throughout the time he was appearing in the show. HMRC disallowed his claim on the basis that the rental was not wholly and exclusively for work purposes, as Mr Healy obtained warmth and shelter from the flat while not working.
The tax tribunal commented: “Each case must be looked at on its own facts and we see no reason…why expenditure on rental accommodation is, except in special cases, in a different position to hotel or club accommodation…There is no hard and fast rule as to when the length of the assignment clearly tips the balance in favour of a conclusion.”
In the end, Mr Healy lost the case. The reason he lost was because he had rented a three bedroom flat so that he would be able to accommodate his friends and family. As this was not a business purpose, it was found that the rental did not meet the wholly and exclusively test. Had he rented a one bedroom flat, or had a business purpose for needing 3 bedrooms, his claim would have been allowed.