Should we charge VAT on event for overseas customer?
Our company organises training events and seminars in marketing skills. We are based in the UK and registered for VAT and have agreed to host an event in London for the staff of a marketing business based in Italy. We have agreed a fee of £4,000 for ten staff, which will include a full day’s seminar plus a three-course lunch and tea and coffee throughout the day.
My understanding is that the fee will not be subject to VAT because we are invoicing an Italian business, but I wonder if it we should charge VAT on the catering part of the event? If so, will the customer be able to claim this VAT from HMRC through the overseas repayment scheme?
However, my main concern is that the contract with the customer allows them to increase the number of delegates and pay an extra £300 per head for each delegate. So, for example, if 15 delegates attend, we will charge £4,000 + £300 x 5, ie £5,500.
Does this mean that we should now charge VAT on the full fee because it is classed as ‘admission to an event’ where the place of supply is the UK, ie where the event takes place?
I have read VAT Notice 741A and am still not clear about the correct treatment. It is important that we get this right because we could be hosting similar events for other overseas firms.
Query 20,735– Rossini.
Marry in haste...
I act for a trading company with three shareholders, X, Y and Z, who each hold 33 of the 99 shares in issue. The three of them are not connected at the moment, but Y and Z are planning to get married in the near future.
Z wants to withdraw from the business to pursue other interests. A purchase of own shares is contemplated, under which the company will purchase all of Z’s shares. All the conditions for capital treatment are met at the moment and there are sufficient distributable reserves to fund the purchase without any need to consider any form of deferred contract. But once Y and Z marry, they will be connected, and as Y will own 50% of the shares after the transaction, if it takes place after the marriage, Z would be deemed to be connected with the company and thus the conditions for capital treatment will not be met.
I am preparing the clearance application. Do I need to mention the fact that Y and Z are about to get married? And if I do, could that mean that the clearance will be refused?
Query 20,736– Best man.
Bare trust?
My client tells me that, 27 years ago, a Nigerian friend of his put £5,000 in what he describes as ‘a life insurance trust’ in the UK for the benefit of his son, making my client the only trustee. Following the death of the friend, his son wanted all the cash, so my client terminated the policy and received £18,000. The insurance company notified a chargeable gain of £13,000, which my client is concerned he may have to pay tax on. The son, who is resident in Nigeria, claims that it was a bare trust and ‘such trusts are not taxed’. I am not sure how to proceed – should my client pay tax on this, or should it be described on his tax return in the white space? Should he withhold some of the funds when he pays the proceeds to the son?
Readers’ views would be welcome.
Query 20,737– Trusty.
A game of dates
I have a question on offshore funds with ‘reporting’ status, where income is accumulated. I understand that if you hold such a fund on the last day of its reporting period, you have to declare any accumulated income as ‘excess reportable income’. But if you sold it just before the reporting date, would there be any income to declare? Would that not just crystallise a capital gain?
Also, could you wait until 31 days after selling, and buy the fund back again and still avoid the charge to income, because the ‘30-day’ security identification rules would then presumably not apply?
And finally, instead of being out of the market for 31 days as above, could you instead buy a different offshore reporting fund in the same market sector, but with a different reporting date, and still avoid the ‘30-day rule’ applying?
This would seem to be an efficient way of using up carried forward capital losses.
Readers’ thoughts on this would be most welcome.
Query 20,738– Bunsen.
