Ticket sales: could agent be treated as principal by HMRC?
One of my clients is trading very well as the middleman for cookery classes and food tasting events. His business model is as follows:
- On his website, he will encourage the sale of tickets for the events, let’s say for a price per ticket of £40. The event organisers are not registered for VAT because they are small entities.
- My client will collect the £40 fees from the punters and pass this money to the event organiser, less an administration/handling charge of 15% per ticket, ie £6 in this example. He will issue an invoice for the 15% fee.
- My client is concerned that because the £40 receipts are going into a bank account in his own name, albeit a separate account headed ‘client account’, HMRC could deem that he should be registered for VAT, ie because the money collected from the punters plus his administration fee exceeds £90,000 on a rolling 12-month basis.
I know that three party transactions are complicated with VAT; should my client take further action to make it crystal clear that his turnover for registration purposes is his fee and not the gross receipts?
Query 20,643– Ticket Tom.
How to treat basic loss and occupiers loss payments
My client has a large garden, part of which (well over a hectare) has been compulsorily purchased by National Highways. An interim payment has been made but no final figure has been agreed.
Among the various payments made as compensation, there is a basic loss payment and an occupier’s loss payment. These payments are based on the value and size of the land acquired but are paid in addition to compensation for the loss of the land and for the reduction in value of the remaining plot.
The chartered surveying and property consultancy firm that is advising my client does not comment on the tax position, despite regularly dealing with compulsory purchase orders.
Do readers have any experience of how to deal with the tax consequences of these two payments?
Query 20,644– Road Trip.
Split gift over two years
My client has annual income of approximately £280,000. He also has a flat that he has owned for years, worth about £450,000, whick he is thinking of giving to his private charitable trust. It will then be sold and the funds used for good causes.
A gift of land qualifies for gift aid, but the whole interest has to be given at once.
In order to spread the gift aid relief over two years, I wonder if the following would work: sell the flat to the charity for its original cost of £170,000 in year one, then give £170,000 in cash to the charity in year two. The gain would not be charged, and the whole value would obtain income tax relief, at the cost of some stamp duty land tax.
If the charity’s constitution allows these transactions, do readers know of any tax problem with the plan? If the charity does not have £170,000 in cash, can this be left outstanding? Would forgiving a debt in year two qualify for gift aid?
Query 20,645– Eastender.
When is a sacrifice not a sacrifice?
My client is the human resources director of a large public limited company. We have recently been discussing the implications of the decision to impose National Insurance contributions on salary sacrificed for pension contributions.
Over the next couple of years the company is likely to be recruiting several senior executives, who will receive substantial reward packages. There will be extensive negotiations before a final package is agreed. Is what happens in those negotiations relevant to the application of the new rules?
For example, if the package has a total value of £1m and the individual says that they want £100,000 of that in pension contributions, will that be caught?
Or is it the case that the individual has never given up anything because they never had it in the first place?
Would the existence of a written offer saying (in effect) ‘you can have £1m, take it how you want’ cause problems?
Some of these issues probably exist within the existing optional remuneration arrangement rules, but in most cases the sums involved are likely to be quite small. However, bringing pensions into the net changes the whole dynamic.
How are others advising on this situation?
Query 20,646– Paymaster.
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