Should we cancel group registration retrospectively?
My client has been VAT registered as a group for many years; the group originally consisted of three trading companies, all wholly owned by the same individual director, but then two ceased to trade, with all business transferred to the other company. Three years ago, the two dormant companies were then struck off the register with Companies House using a members’ liquidation process.
The end result is that my client has continued to have a group registration but with only one member. My view is that this is not a problem because HMRC is still getting all VAT that has been charged, via the usual quarterly returns, but a colleague says that it is not as straightforward as this and my client should deregister and re-register with a separate number.
Should this be done retrospectively or with a current date?
Query 20,623 – Groupie.
Where there’s a will, there’s a way
We provide accounting and tax services to the executors of a deceased’s estate. They are the deceased’s two children: one lives in the UK, but the other has lived in Australia for many years. I presume we charge VAT, but I am not sure – and it got me thinking: what if both of the executors lived abroad, but the deceased was UK resident? Is it relevant where the will was executed or where the assets are located? And would there be a difference between estate-related services supplied by an accountant, and those supplied by a lawyer?
Readers’ views would be helpful.
Query 20,624 – Local Boy.
The Queen’s Gambit
My clients are a retired couple. The husband is 70 years old and in poor health. The wife is 73 and in good health.
The husband has a large pension fund and is looking at ways to mitigate his inheritance tax (IHT) liability. He wishes to withdraw monies from his pension fund, either by way of a partial tax-free portion encashment or a portion of income, or combination of the two, and then gift this to his wife.
In view of the anticipated life expectancy for the wife here being considerably longer than that for the husband, it is then the wife’s intention to make a lump sum gift to their adult daughter. The wife is more likely than her husband to live for seven years and the couple hope that the gift to the adult daughter will drop out of the wife’s estate for IHT after the seven-year anniversary of the gift.
Do readers anticipate any difficulty with this strategy?
Query 20,625 – Partridge.
Race against time
My client is an elderly man in his 90s. He is Kenyan but is a long-term UK resident who worked most of his life for the UN. He is in receipt of a UN pension, which we have been reporting as fully taxable in the UK via self assessment. His daughter has found some info via an AI chat bot that suggests that the element of his pension equal to what he paid into the pension may be exempt under the UK/US double taxation agreement (DTA). I have since researched this and understand that the principle was established in the Macklin v CRC [2015] STC 1102 case in 2015, whereby because a US taxpayer would be exempt from US tax on the amount of pension received equal to his/her contributions made to the pension, article 17(1)(b) of the UK/US DTA obliges the UK to replicate this treatment. I found a UN document which confirms this treatment in the US, but that does not help us in the UK.
If it is possible to claim that part of the pension is exempt from UK tax, I believe we would need to know how much my client paid into his UN pension to calculate how much of the pension payments being received are exempt from UK tax. As my client is in his 90s, and not in good health either physically or mentally, this may be a near impossible task. His daughter holds full power of attorney in the UK, but this may not be recognised by the UN pension department, should we need to obtain the information from them. Even if we are able to obtain details of the payments into the pension, I am not sure how the tax-free element of the annual pension received is calculated.
Do any readers have experience of this?
Query 20,626 – The Detective.
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