I recently spoke with a new client in the renewable energy sector who had lost confidence in the advice she was receiving from her accountant.
She had only been with them for around six months, but something did not feel right to her. After reviewing the situation, it became obvious why.
My now client was working on a temporary project site roughly 300 miles from her home. Commuting 600 miles a day was obviously unrealistic, so she rented a flat in Edinburgh to stay near the site during the working week.
Her accountant incorrectly advised that the accommodation costs were not tax deductible.
In this situation, the temporary workplace rules applied, meaning the accommodation costs could potentially qualify for tax relief. This is a common area that contractors and consultants need proper advice on, particularly when projects involve working away from home for extended periods.
What made the situation even more frustrating was the inconsistency in the logic.
Had my client stayed in a hotel instead, I suspect the accountant would probably have accepted the hotel costs as tax deductible without hesitation. Yet that option would have been significantly more expensive for the client and would likely have resulted in a larger tax deduction overall. This is exactly why specialist knowledge matters.
Contractors in sectors like renewable energy, engineering, construction, and consultancy often work on temporary projects far from home. The tax rules around travel, accommodation, and temporary workplaces are not always straightforward, but getting them wrong can be extremely costly.
In this case, following the original advice would have cost my client around £8,500 per year unnecessarily.
I always believe clients should understand why advice is being given, not simply be told what to do. If something does not sound right, ask questions. A good accountant should be able to explain the reasoning clearly and confidently.
Get in touch
If you regularly work away from home, or you are unsure whether your current accountant fully understands the contractor sector, it is worth having a proper review of your position. Feel free to give me a call on 07866 465 223 or email martin@mcaccounting.co.uk if you’d like my help.