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New queries: 13 February 2020

10 February 2020
Issue: 4731 / Categories: Forum & Feedback

Change confusion; Helping abroad; Metal trading; Blowing the whistle

Change confusion

Responsibility for payments under the IR35 rules.

The forthcoming changes to IR35 are causing me some concern. One of my clients, A Limited, makes payment to self-employed sub-contractors who are within the scope of the construction industry scheme. It provides ground-working services on contracts on a site-by-site basis. A Limited’s client is a major national housebuilder, which is obviously a large company.

Looking at the guidance published on the HMRC website, I am worried as to whether my client, who contracts directly with the major housebuilder to provide construction services on a number of their sites will, in effect, become the feepayer as explained in the department’s draft guidance.

The reason for saying this is that, under the heading, ‘Check if you’re the feepayer’, at the second paragraph, it states: ‘To be a feepayer you must be the lowest party in the labour supply chain. This is usually the person paying the workers’ intermediary’.

Here my contention is that the labour supply chain exists between the individual sub-contractors and A Limited, which is a small company. But does the fact that the end client, which happens to be a major housebuilder and a large company, mean that A Limited can be said to be the feepayer?

Taxation readers’ views on this would be appreciated.

Query 19,511 – Mick.


Helping abroad

VAT on personal assistant services.

I act for a sole trader client who is registered for VAT and provides personal assistant services to a range of business and private customers.

One of her clients is resident in a UK home for disabled people and my client deals with all of her administration and paperwork issues (claims for benefits and suchlike) as well as some of her personal needs, such as shopping and bill payments.

My client raises her sales invoices to a trust based in Switzerland and has never charged VAT. She has based this decision on the fact that the trust is based outside of the EU, but is this correct?

Also, can she claim input tax on related costs, or is she partly exempt as supplying exempt welfare services to someone in the UK? Her total annual fees are £90,000, of which £10,000 relates to the trust work. So if this work is exempt from VAT, can she deregister as many of her clients are unable to claim input tax on her fees?

Readers’ thoughts would be very much appreciated.

Query 19,512 – Moneypenny.


Metal trading

Does the purchase and sale of metals amount to a trade?

My client is an employee. However, and wishing to make some more money, he decided to start trading in metals. He doesn’t buy and sell scrap metal, but rather buys and sells valuable metals through an online platform.

Over the past year, I understand that he has made 20 or 30 such purchase and sale transactions. He had no previous experience of doing this and this activity is unconnected with his normal employment. In fact, and perhaps due to his lack of experience, so far he has not made a profit and has losses of about £5,000.

My question is how this should be declared on his tax return. With the amounts involved at present, and given that he incurs minimal other costs, I can see the benefit of treating this activity as capital transactions. In that case, and if he and his wife were to undertake the trades, I suppose they could make joint gains of more than £20,000 each year without a tax liability arising. However, the metals are not held for any substantial length of time, so the purchases do not appear, to me at least, to be made with a view to making a long-term capital gain from investment.

From my research into the ‘badges of trade’, the client does seem to tick most of the boxes although, so far at least, he is funding the transactions from his own capital rather than borrowing to do this.

If I do decide that this is a trading activity, the next question is whether I can claim loss relief against his employment income. Would HMRC be able to counter such a claim – or claims – if the losses continue for the next few tax years?

I hope that Taxation readers can advise here.

Query 19,513 – Iron Man.


Blowing the whistle

Reporting a competitor who should be VAT registered.

I act for a VAT-registered client who believes that a competitor should also be VAT registered.

My client thinks that this puts his business at a commercial disadvantage because he cannot compete on a fair basis. In principle, all his competitor’s supplies should be standard rated and these are over the registration threshold.

On behalf of the client, I have logged a complaint with the enquiries team at HMRC and the VAT fraud online portal. This has had no effect and I feel that I am going around in circles because no one from HMRC appears to be willing to take up this issue.

I would very be interested in Taxation readers views on the matter and what action can be taken.

Query 19,514 – Ratty.

Issue: 4731 / Categories: Forum & Feedback
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