Calculating building costs for home built 30 years ago.
My client, Jack, bought a plot of land in the 1990s, and built a second home there. Now, 30 years later, he is planning to sell it, and I am wondering how to calculate the gain.
The Land Registry records give me details of his purchase cost, but Jack has kept no records whatsoever of the build costs.
Readers’ views are sought; might, for instance, it be appropriate to obtain an estimate of today’s build costs, and then seek to extrapolate backwards to his guessed build date? Or what better methods might exist?
Query 20,587– Puzzled.
What input tax can be claimed on pre-registration expenses?
I act for a client who organised a football tournament which had fee income from teams taking part plus sponsorship and advertising revenue. The total sales were less than £90,000, so there was no requirement for my client to register for VAT.
He has recently organised another tournament and the combined income of the two events means he must now register for VAT at the beginning of the second month after the second event took place.
The problem I have is that my client is convinced that he can claim input tax on his first VAT return for all services he incurred for the second tournament – such as pitch hire costs and equipment hire – because it took place within the six-month period before he was registered. He also thinks that he can claim input tax on all goods that he purchased for the tournaments – such as footballs, goal nets and free bottles of water for the players – because they were incurred in the four-year period before registration. He claims that private schools have had a similar opportunity to claim input tax on all their pre-registration costs, but this does not seem right to me.
What do readers think?
Query 20,588– Kane.
How to deal with possible cash receipts and payments.
Probably like many others, I am registered on a local neighbourhood social networking platform. Users can share local news, alerts, recommendations, connect with local businesses, buy and sell items, join community groups and the like.
While seeking information about a local event, I saw a posting from a person who was looking for work and this specifically mentioned that they wanted to be paid in cash. I thought that this was perhaps a little suspicious; but imagine my surprise when I saw that one of my clients – a cleaning company – had replied with a post to say that they had work available, although no confirmation was given regarding the method of payment.
I am now rather worried as to whether I have the full picture of my client’s business affairs – I also noted that he was selling what appears to be equipment and supplies that might be used or that had been used in a cleaning business.
Can Taxation readers give me any advice on how I should deal with this matter and whether, when and how I should broach this with my client?
Query 20,589– Whitewash.
Will an 18-25 trust meet the inheritance requirement?
My clients are a married couple, both aged 75. Their total asset worth at the present time is approximately £1.8m, of which approximately £400,000 is represented by the principal private residence with the balance in mostly cash, savings and deposits.
They are currently looking at leaving their family home on second death for the benefit of either their only adult daughter, or possibly their only grandchild. Currently the grandchild is eight years old. Their preferred route is to leave the private residence to the grandchild. In my limited experience of these kinds of matters, they could leave the property to the grandchild as an immediate post-death interest, and this should qualify for use of the residence nil rate band by the estate of the last surviving party to the marriage. However, they have expressed a preference to ensure that the grandchild does not have full title to the property assets until he is 25.
Would an 18-25 trust overcome this problem? My understanding, however, is that an 18-25 trust established by a grandparent will not meet the requirements for the property to be closely inherited by the grandchild.
Can readers shed any light on this?
Query 20,590– Partridge.
