Case Study: How Geoff Ended Up Owing Thousands After Overclaiming Working From Home Expenses
Geoff came to us through a recommendation from one of our existing clients. By the time he reached out, HMRC had already opened an investigation into his tax returns and he had just two weeks left to respond. He earns over £100k a year, so any mistakes were always going to be costly.
He already had a sense of what was coming, because HMRC had suggested the amounts they believed he owed. Once we reviewed the information he had, we agreed with their findings.
The main issue was his working from home expenses. For two to three years he had been claiming far too much, including costs relating to building a garden office. These claims had started just after covid, when a lot of people still assumed the relaxed rules on home working applied. But as an employee, you can only claim working from home expenses if the office is not available to work from or is officially closed. His office was open, so the claims simply were not allowed.
HMRC recalculated everything and confirmed he should only have claimed around £3k. He had been claiming between £5k and £15k a year, so there were large amounts that had to be added back. At a 45 percent tax rate, plus interest and a 100 percent penalty, he now faces a repayment of several thousand pounds per year. He is setting up a payment plan because it is more than he can afford in one go.
To make things tougher, once HMRC found issues in one year, they began reviewing the others as well. We are now helping him work through the remaining enquiries. One year still needs more information before they can close it.
Geoff did have an accountant during the years he made the claims, but they were not qualified or regulated. Nothing was checked properly and the wrong amounts were submitted without any warning about the rules.
When we explained everything clearly, Geoff said he understood. He was disappointed, stressed and frustrated that it had got to this point, but relieved to finally know what was going on and to have someone supporting him.
He is now a full client of ours and we are guiding him through the whole process. If he had been with us earlier, or had our HMRC investigation protection in place, we would have handled the entire enquiry for him and the incorrect claims would have been spotted long before submission.
This case shows how important it is to have a qualified and regulated accountant who understands the rules and keeps you safe from costly mistakes.
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