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Auf wiedersehen
I act on behalf of a client who is a young man who continues to be concerned about the consequences of Brexit. He therefore made the decision to stop working through his personal service company in June 2019 and went to live and work in Germany.
He has, in effect, continued to do the same work, but he works as a Freiberufler, which is a German term for freelancer. He is now a self-employed individual and he is contracted through a different UK company than before. Previously, he received his fees through a UK bank account and these were then transferred to Germany.
From 1 April 2020, he transferred his self-employment contract to a Dutch company and is no longer paid through the UK, but he continues to work and live in Germany.
As far as I can see, he will be non-resident from 6 April 2020 as long as he meets the criteria, but he will be fully resident for 2019-20 unless readers can come up with any suggestions or advice on this particular point. Although the tax will be covered by the double tax treaty, I am more concerned about the National Insurance implications of these working arrangements.
Could Taxation readers provide guidance on the rules regarding National Insurance contributions in this particular context?
Query 19,543 - Loner.
Furniture business
I have a client, Company A, that forms part of a group of companies.
Company A is a wooden furniture manufacturing company that has been struggling over the past few years.
The company has accumulated trading losses carried forward as at 1 January 2020 of about £5m, all of which arose after 1 April 2017.
Company A is potentially going to acquire the trade of a third-party company which operates as a wholesale supplier of wood. There are no major changes planned to the acquired trade.
I would like advice as to whether it is possible for Company A to offset the brought forward losses of its furniture manufacturer trade against the profits that arise in the wholesale trade following the purchase of the business.
Is this offset possible, or can Taxation readers tell me of any restrictions that might apply here?
Readers’ thoughts would be greatly appreciated.
Query 19,544 – Struggler.
Incentive
Our company rents three floors of a building from a landlord on a 15-year lease but, as a result of an increase in our home-working arrangements with staff, we no longer need the top floor.
We therefore paid a third-party company £24,000 as an incentive for it to take over the remaining 12 years of the lease with our landlord. The lease has therefore recently been assigned from our company to them.
The solicitors and the contract clearly state that the payment is standard rated for VAT, but the new tenant is saying that there is no obligation for them to issue a VAT invoice because it is a one-off transaction.
Is this correct? And can Taxation readers confirm that the payment is standard rated and not exempt? We are not aware that the new tenant has opted to tax the building.
Query 19,545 – Property Man.
Coronavirus confusion
My client owns a small convenience store and newsagents. He has several full-time and part-time employees. One employee has recently come into contact with a family member who is showing symptoms of coronavirus. As a consequence, the employee has decided that she should self-isolate for two weeks. My client and, I must admit, myself are confused regarding her entitlement to pay. Should she now be paid statutory sick pay or should she be put on furlough with the client paying her salary as normal?
Presumably, in the latter case, the client will be able to recover 80% of the salary at some point?
Also, can Taxation readers advise on the options of the employer paying salary or a reduced salary to any furloughed employees. From a financial viewpoint, I suppose it would be advantageous (for the client at least) that they pay only 80%, but should they be aware of any general legal or employment law issues in paying a reduced salary in these circumstances?
Another employee receives the National Insurance retirement pension and I was wondering whether this makes any difference to the amount that she should be paid or that would be recoverable by the employer if she is furloughed.
The shop also employs six paper boys and girls. Some of their parents have expressed concern that, when making the deliveries, they are coming into contact with doors and gates that may harbour the infection. These parents are now not allowing their children to make deliveries. I understand that the children are 16 years old and I am wondering whether they have left employment voluntarily or should they be treated as self-isolating or as furloughed? If one of the latter two options applies, are they eligible for statutory sick pay? Alternatively, if the shop owner decides to furlough them, can he claim reimbursement under the coronavirus job retention scheme?
I hope Taxation readers can provide some clarification to these questions.
Query 19,546 – Pasteur.
