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SEISS reporting
Reporting Covid-19 payments on tax return.
I am becoming increasingly concerned about how to deal with the 2020-21 tax returns for clients who claimed one or more of the first three self-employment income support scheme (SEISS) grants. These have to be reported on the self assessment return and page 5 of the main tax return requires a taxpayer to declare SEISS payments incorrectly claimed.
Agents were not permitted to make SEISS claims so in many cases the first I will know of what was claimed will be when the clients provide information in mid to late January.
How far do I have to go in satisfying myself that the claims were valid before I can submit a return with no entries for over-claimed SEISS? Can I give my clients the benefit of the doubt? Can I somehow disassociate myself from the SEISS information on the return?
How are other agents dealing with this problem? I look forward to hearing from any readers who are experiencing similar dilemmas.
Query 19,871 – Worried.
Group registration
Holding company VAT problem.
We act for a holding company that is not VAT registered but has incurred VAT on purchases for legal and professional fees relating to its trading subsidiaries. It has just come to light that one of the VAT registered subsidiaries has claimed input tax on all of these fees, even though the supply of services was to the holding company.
Is there a solution to this problem which means the input tax will not need to be repaid to HMRC? Can a VAT group registration be done retrospectively, so that the effective date of the group registration coincides with the date when the holding company first incurred VATable fees two years ago?
The group income is fully taxable and the holding company would be a member of the group. If, instead, we apply for a VAT group registration from a current date, will this avoid the need for the subsidiary to make any past error correction to HMRC on the basis that the holding company is now a group member? The total VAT is £80,000. Are there any other possible solutions to solve this problem?
Readers’ thoughts would be appreciated.
Query 19,872 – Groupie.
PET
Treatment of payment to family member for home purchase.
I have a question on the tax implications of a gift of money towards the purchase of a home. If this money is coming from a joint bank account of parents to an adult child I presume that this would constitute a potentially exempt transfer (PET) and that the seven-year rule will be applicable.
However, HMRC’s Inheritance Tax Manual IHTM04057 stipulates that a transfer must be made by an ‘individual’. If, therefore, one parent dies before seven years, does the gift still qualify as a PET with the surviving parent assuming full responsibility for the original gift which will remain unaffected? Alternatively, does this change the gift from being a PET? If so, what does that mean for the recipient adult child of the original gift?
Also, could readers assist with the tax implications for the parents on giving the money or for the adult child receiving the money in the circumstances where it is agreed that there should be nominal monthly repayments back to the parents but that these payments would probably mean that the full amount would not be paid within the lifetime of both parents. Finally, are there further tax implications if the repayment account is set up in the adult child’s name?
I look forward to replies from readers.
Query 19,873 – Confused.
UK concerts
VAT confusion for Spanish expat playing in the UK.
I have a festive VAT query and would appreciate if readers could help.
I act for a client who now lives in Spain – he performs as a singer in bars and cabaret clubs in Benidorm on a self-employed basis and is registered for Spanish VAT.
He is now in the UK doing a number of carol concerts at different venues; some of the venues who will pay his fee are VAT registered but not others. For example, he is singing at two private Christmas parties and a New Years’ eve party and will invoice the hosts.
Hopefully, during his stay in the UK, he will gather a few contacts to enable him to return next year to play some more venues.
With regard to VAT, should he charge Spanish VAT on his fees or, because he is performing in the UK, will he avoid a VAT problem because his fees will be less than £85,000? Presumably the VAT registered hosts will apply the reverse charge on their own returns?
Feliz Navidad to all Taxation readers and I hope you have a great Christmas!
Query 19,874 – Joseph.
