Q- My client took part in Employee Benefit Trust (“EBT”) planning, and HMRC missed the windows to open an enquiry on a PAYE/NIC basis, as well as issue any associated penalties. HMRC did raise a Corporation Tax (“CT”) enquiry into the original CT deduction claimed, which remains open. They have been invited to settle on the basis of voluntary restitution before 31st May 2018 otherwise there is the possibility of a Part 7A charge applying in April 2019. Why should my client consider this?
A- My client should strongly consider this opportunity, as in the current climate it may be the best way forwards for the client. In fact, HMRC is strongly encouraging settlement options to clients.The part 7A charge referred to is more commonly known as the Read More
Q- My client is a retired solicitor who deregistered from VAT five years ago. He has been in touch to advise he has received an invoice from a barrister who was working on a case for him before he retired. Apparently, the case has recently been decided and under the agreement they had, the barrister has now invoiced for her fees. Is my client able to claim the VAT element or is it now too late as it is capped?
A- Late claims for input tax are restricted to four years from the due date of the return in question (Regulation 29 VAT General Regulations SI 1995/2518).
The entitlement to Read More
Q- My client has asked me about the need for a mental health first aider at work, is this a legal requirement?
A- Whilst the need for a mental health first aider is not currently a legal requirement, it is a practice my client should consider implementing given the rise in reported instances of work-related mental ill health and the detrimental impact this can have for employers.
It is likely Read More
Q- My client’s husband passed away in 2005 and the whole estate was left to my client, his wife. His unused standard nil rate band was fully transferred to his wife. Will my client also receive an unused residential nil rate band from her late husband or will the fact that he passed away before the residential nil rate band was introduced mean that it is not available?
A- The residential nil rate band (RNRB) is available for deaths on or after 6th April 2017, with the current RNRB being £125,000 for the 2018/19 tax year.
If the RNRB had not been fully used within the estate of the individual who was first to die from a married couple or civil partnership, then the unused part can be transferred to the surviving spouse or civil partner. It does not matter when the first death occurred, as long as the second death is on or after 6th April 2017.
The amount of the RNRB that can be transferred to the surviving spouse is expressed as a percentage which cannot exceed 100% (similar to the standard nil rate band). As the client’s husband passed away before 6 April 2017, there was no RNRB at the time so none could have been used. Therefore, the amount of the transferable RNRB will be 100% of the RNRB in force at the later death of the surviving spouse or civil partner.
If my client passed in 2018/19 and assuming all other conditions for the RNRB are satisfied, she will receive her RNRB of £125,000 and the transferred RNRB of 100% of £125,000. Therefore, she would have a total of £250,000 of RNRB to set against her estate.
One point to be aware of is that the amount of the late husband’s transferrable RNRB will be subject to the tapering provisions. Where the value of his estate after liabilities exceeded £2 million, then the transferrable RNRB is tapered by £1 for every £2 in excess of £2 million. As such, it is possible that the transferrable RNRB can be tapered to nil.
Q- My client has a question about principle private residence relief. She resides in a property that has grounds attached to it which exceed half a hectare. Within the grounds of the residence, there is an outbuilding which in the recent past had been lived in by an elderly relative. However, more recently the outbuilding has been let out. My client now wishes to sell their property and the outbuilding. Would Capital Gains Tax be charged on the sale of the outbuilding?
A- As the normal ‘permitted area’ for private residence relief has been exceeded, it is first necessary to establish whether the grounds were in keeping with the size and location of the residence and whether they were actually enjoyed as part of the main residence.
Secondly, Read More
Q- My client joined the Flat Rate scheme on 1st January 2016. He is a sole trader carpenter and has a flat rate of 14.5%, but also runs a small DIY shop part time. The shop was previously only open four days per week but the business has expanded, and from March 2018 the shop is open six days per week whilst my client continues to do occasional carpentry jobs. Previously the carpentry income made up the bulk of his turnover. Due to the change in the business, which flat rate percentage should they apply to the gross turnover as they applied 14.5% last year?
A- Our client has a flat rate of 14.5% as a carpenter because the materials supplied form less than 10% of his carpentry income; however, there is also a rate of 9.5% if the materials supplied are 10% or more of the carpentry turnover. As a retailer, he would Read More
Q- My client has a rental property from which he only receives a small amount of income, he has heard about the new £1000 property allowance and wonders if he can make use of this?
A- The property allowance of £1000 was introduced in the Finance Act (No. 2) 2017. The legislation can found in ITTOIA2005 s783B to S783BQ.
This new allowance is available from
Q- A client has told me their employees are questioning if they have to work on the upcoming bank holiday, what should I tell them?
A- As Brits we all look forward to a bank holiday, whether we take the opportunity to enjoy an extended weekend away or to catch up on some DIY around the house. Therefore, bank holiday entitlement can be a particularly emotive issue in the workplace. Whilst many organisations offer these to staff as an automatic day off, others may Read More
Q- As a jobbing builder, my client has reduced the number of projects he takes on as he approaches retirement, and as a result, his turnover has fallen below the VAT threshold and he wishes to deregister. However, he receives rental income from a small mixed property portfolio, some of which he opted to tax some years ago. What will happen if he deregisters?
A- You are thinking of the rules around deemed supplies of assets on hand at deregistration. VAT Act 1994, schedule 4, paragraph 8 deems a supply of goods to take place when a person ceases to Read More