Input tax on taxi fares booked through an online platform?
I am confused about the new rules for private hire vehicles (PHV) and whether our business can claim input tax on rides for our staff when they do business trips. It all seems very confusing because, as I understand it, we will be charged VAT on Uber rides in London because Uber is the principal and the driver is working for Uber, but not if we use Uber outside London because the driver is then charging our business and they will trade below the compulsory registration threshold.
Is this correct? If so, when does London not become London and how can we get a tax invoice to support any input tax claim on our VAT returns for London trips? Our business is based on the outskirts of the city, so we use Uber inside and outside London.
As a separate question, if our staff are away on business and order hot food through an online platform, such as Uber Eat, is there input tax to claim on these meals if we pay the bill? A client suggested ‘no’ as they fall within the TOMS scheme because there is a supply of both food and delivery, which seems a strange outcome.
Query 20,671 – Black Cab Man.
Best way to tax a lump sum from a US pension fund
In a situation where a UK resident receives a lump sum distribution from an individual retirement account in the United States and the individual is not a US citizen, the double tax treaty in article 17(2) indicates that this lump sum is only taxable in the US.
However, in March 2025, HMRC changed its view on this, as stated in HMRC’s International Manual at INTM163160, and indicated that it would utilise the savings clause and tax such lump sums going forward (although the Double Taxation Relief Manual at DT19853 has not been updated to reflect this), with credit for any US tax paid.
Do any readers know if this means that the lump sum is taxable under ITEPA 2003, s 574A, and as such the various reductions available such as the value of the scheme at 5 April 2017 etc would be available? And presumably there is no question of a 25% tax-free lump sum?
Any help would be appreciated.
Query 20,672 – Double Trouble.
Historical business-to-client invoices
Now that all the tax returns have been submitted except three where the client is at fault, I have met a problem. We have clients living abroad (non-resident) who own buy-to-let properties in the UK. I have acted for such clients since VAT was introduced in 1973. We have never added VAT to their fee note. I don’t know why, but we never have.
Two of our students, when preparing the fee notes, have pointed out that we should always have charged VAT because these are business-to-client invoices and the properties are in the UK.
Have we always treated such invoices incorrectly or has something changed that I missed?
Query 20,673 – Michelle.
When is tax due on share sale?
My client’s daughter has been operating a beauty business for a number of years, being the sole director and holder of the total issued 1,000 ordinary shares. A decision was made in January 2025 to sell the business to two full-time employees at a selling price in excess of £140,000.
By a sale agreement made in January 2025, 400 shares would initially be sold by 29 January for a consideration of £56,000, on the understanding that full settlement was made on the due date, otherwise the sale could become invalid. The transfer of the shares was duly registered at Companies House. My client’s daughter, at the point of sale, agreed to remain a director and work part-time in the business for three years, to effect a smooth changeover and overcome problems of staff replacements.
The remainder of the unissued shares would be sold at yearly intervals over four years on 29 January, as follows: 2026 – 120 shares; 2027 – 170 shares; 2028 – 220 shares; 2029 – 90 shares.
Again, the consideration would have to be paid on the due date, as the sale could become invalid.
Here the problem arises. My client’s daughter’s financial adviser maintains that capital gains tax should be calculated on the whole of the 1,000 £1 shares in the fiscal year 2024-25 as, in essence, they have been sold at the date of the sale agreement, involving a considerable capital gains tax liability. The 2024-25 income tax return includes this detail. However, my client’s contention is that capital gains tax only arises on the sale of shares each year, which if allowable will save considerable liability. Also, only 400 shares and not 1,000 have been registered at Companies House. What do readers think?
Query 20,674 – Anxious Father.
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