Archive April 2019

VAT Question of the Week: 28 Day Rule

Q- My client runs a small bed and breakfast and a furnished apartment which to date has been let on an Airbnb basis with a daily linen change and cleaning service. Normally she would account for VAT on all of these stays. Now she has received an enquiry from a construction company about exclusive use of both for a period of 12 months to house some of its employees working away from home. Should she still charge VAT?

A- The VAT Act 1994 Schedule 9 Group 1 exempts the grant of a licence to occupy land. However, item 1(d) excludes from the exemption the ‘provision in a hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation …’ Read More

Tax Question of the Week: Residential Nil Rate Band

Q- If I leave my main residence to a discretionary trust on my death for the benefit of my children, will I still benefit from the residential nil rate band?

A- To benefit from the residence nil rate band you must leave your main residence to a direct descendant. For the purpose of this threshold, the direct descendant of someone is a child, grandchild or other lineal descendant, a husband, wife or civil partner of a lineal descendant (including their widow, widower or surviving civil partner), a child who is, or was at any time, their step-child, their adopted child, a child who was fostered at any time by them, a child where they’re appointed as a guardian or special guardian when the child is under 18. This does not include nephews, nieces, siblings, and other relatives. Read More

VAT Tax Question of the Week: MTD and Cash Accounting

Q- My client is a wedding and party planner, and is compulsorily VAT registered operating the cash accounting scheme. Their current system is not particularly sophisticated and they only operate using a manual cashbook. I am in the process of ensuring they are MTD compliant for their 07/19 return, but want to keep things as simple as possible for them. Can they continue to operate a cashbook in a spreadsheet format and submit via bridging software?

A- HMRC’s Notice on Making Tax Digital 700/22 (https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat), sets out the digital record-keeping requirements in section 4.3. It states that for both supplies made and supplies received a digital record should be kept of: Read More

VAT Question of the Week: Input Tax on Re-Registering for VAT

Q – My client is a bathroom fitter and was VAT registered from January 2017 to March 2018 as he had a contract with a large developer to fit en-suites into new-build dwellings. His supplies were mostly zero-rated and he received repayments of VAT from HMRC. He bought a new commercial vehicle and specialist tooling in August 2016 on which he recovered the VAT as pre-registration input tax. On his final return, for the tax period ending 31st March 2018, he accounted for VAT on all the assets and stock on hand as a deemed supply.


The client has now been approached by another developer to install bathrooms and will look again to VAT register in order to recover his input tax. His effective date of registration (EDR) will be 1st April 2019. We are happy that he can recover pre-registration input tax on new tooling and stock on hand at registration that he purchased earlier in 2019, but can he also recover the input tax on the commercial vehicle and the tooling purchased in 2016 as pre-registration input tax again?

A –

Regulation 111 entitles businesses that buy goods and services prior to VAT registration, to be used for its taxable activities after registration, to recover the VAT as input tax provided that: Read More

Tax Question of the Week: Amortisation Relief

Q – I have heard that we can now get corporation tax relief for the amortisation of goodwill, is this true?

A- Amortisation relief in respect of intangible assets appears to have experienced a bit of a rollercoaster ride throughout the various legislative amendments in recent years. CT relief was initially allowable for amortisation of goodwill until restrictions were made for connected company acquisitions of post-March 2002 goodwill after 2nd December 2014. Read More

HR Expert: Agency Workers Rules

Q- My client will be taking on an agency worker for the first time in a few weeks, what things do they need to be aware of?

A- Many employers regularly turn to agency workers to fill short term needs in their business, however as this will be your client’s first time using an agency worker there are some key things they should know.
First of all, it will be important for your client to have a clear understanding of the definition of an agency worker. This is an individual who is engaged in a contractual agreement with a temporary work agency to work temporarily for, and under the supervision and direction of, the hirer i.e. your client. Read More

Tax Question of the Week: The National Minimum Wage and National Living Wage

Q- Our pay period runs one week in arrears and we are due to pay employees on Friday 5th April for the work that they did during the week 25th – 31st March.  What rate of pay should they be paid at, as we are aware that the National Living Wage rate has increased?

A- The National Minimum Wage (NMW) and National Living Wage (NLW) rates increased with effect from 1st April 2019 to: Read More

VAT Question of the Week: Re-Registration

Q- My client runs a Café, and de-registered for VAT back in May 2018, on the grounds that they believed their turnover would not exceed the deregistration threshold of £83,000 over the following 12 months. This was due to a slump in trade following the opening of a popular competitor across the road. Prior to this, the client had been VAT registered since January 2015 (more than 12 months). As of December 2018, the clients turnover for the period June 2018 to December 2018 was £63,000, but their rolling 12 month turnover (January 2018 to December 2018) was back up to £93,000, as the shop across the road went out of business. Does this mean they have to re-register?

A- Under VAT registration rules, schedule 1, paragraph 1(4) of VAT Act 1994 specifies that when considering a person’s taxable turnover to determine whether registration is required, any turnover from a previous period of registration should normally be excluded.

The exception to this would be where a trader misled or withheld relevant information from HMRC at the time of cancellation – for example, a trader deregistered for VAT on the grounds that their turnover would fall below the £83,000 deregistration limit over the following 12 months because they told HMRC that they were going to close their shop for an extra day per week, however the shop never intended to do so. Read More

HR Expet: Change in NMW

Q- My client is wary of the new National Minimum Wage rates that will come into effect from 1st April. What things do they need to consider from an employment law perspective?

A- As we head into Spring the latest set of employment law changes are set to come thick and fast, with the first of these being a change in national minimum wage (NMW) rates.

From 1st April 2019, the national living wage (NLW) for those aged 25 years and over will increase to £8.21 per hour. Minimum wage rates will also increase across the various age categories, rising to £7.70 per hour for 21-24 year olds, £6.15 per hour for 18-20 year olds and £4.35 per hour for those over the compulsory school age but not yet 18. The apprenticeship rate for those under the age of 19, or 19 and over but in the first year of their apprenticeship, will also increase to £3.90 per hour. Read More

Tax Question of the Week: Tax Year end Planning

Q- One of my private clients realises the end of the tax year is rapidly approaching and is wondering if there is anything he should be considering in relation to his tax affairs?

A- There are various ways in which an individual can help reduce their tax liability and whilst they are generally considered more at this point in the tax year, can actually be considered at any time during the tax year. Thought should be given to the following areas – Read More

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