Can my company issue a tax invoice after deregistration?
My company traded from a building and we also rented out the first floor to a separate business. We therefore opted to tax the building 12 years ago because major works were carried out and we wanted to claim input tax without any partial exemption issues, ie we charged VAT on the rent to the tenant.
We sold the building for £800,000 plus VAT in August last year when we ceased to trade. The buyer took over our first-floor tenant but didn’t meet the required conditions of a transfer of a business as a going concern (TOGC), hence our charge being ‘plus VAT’ on the sale. We didn’t issue a VAT invoice at the time as the buyer did not require one. I deregistered the company as soon as the building was sold on 31 August 2025 because we had ceased to make taxable supplies.
Six months later, the buyer has asked me for a tax invoice because, he says, his business is now able to claim input tax as they have finally registered for VAT and opted to tax the building. However, can we issue an invoice if my company is deregistered? Or can we issue a backdated invoice? If not, what can I do for the buyer who understandably wants to claim input tax of £160,000, which I have declared as output tax on my final return and fully remitted to HMRC?
Query 20,695 – Mayfair Man.
Gifts out of irregular income
I am considering the ‘normal expenditure out of income’ exemption for IHT. My client has in past years done a rough calculation – not dissimilar to the HMRC form IHT 403 – and has made a practice of giving his children about 80% of the calculated surplus. This has generally been a similar amount from year to year. However, from this year on he is proposing to take additional lump sums from his pension fund – to forestall the IHT charge that will apply from April 2027 – and increase his gifts to his children. He will pay additional income tax now, but reckons there will be an overall saving. If he does the same calculation, in the first year 80% will be a much bigger figure than before. By year 3 or 4, it will have become ‘normal’ again – but do readers think that the first larger payment, clearly less than taxable income for the year, would be exempt?
Query 20,696 – Lumpy.
Late payment penalties – how can this be resolved?
I would welcome readers’ views on a recent First-tier Tribunal decision concerning the application of late payment VAT penalties under the Finance Act 2021, Sch 26.
In brief, the case involved a business that submitted VAT repayment returns for multiple periods up to September 2023. HMRC carried out the usual repayment checks but delayed repayment until the December 2023 return was submitted showing a VAT liability due. Based on this confirmation, the taxpayer understood that the approved repayment amounts would be promptly credited to their VAT account and automatically offset against the VAT due for the period now in dispute.
However, because the previously approved repayments had not yet been applied to the account, the taxpayer did not have sufficient funds to pay the full amount by the due date. The remaining balance was ultimately paid, but late. No formal assurances were sought from HMRC regarding the timing of the credits, and no time to pay arrangement was put in place. HMRC issued late payment penalties at 2% of the outstanding VAT at day 15 and 30 respectively, and the tribunal upheld them, finding that the taxpayer’s reliance on the expected offset did not meet the statutory test for a ‘reasonable excuse’. The penalty charged was in the region of £50,000.
Given this background, I would be grateful for readers’ views on what potential options remain for a taxpayer who finds themselves in this position following an unsuccessful tribunal appeal and who genuinely believes that HMRC has charged the penalty unfairly.
Query 20,697 – Out Of Pocket.
Saving the pennies
The finance director of a client company has a very tight control over the purse. Where employees use their own cars for business purposes the company pays mileage at the HMRC approved rate, but employees are required to reduce their claim by an amount equal to their normal home-to-work mileage, even though HMRC no longer requires this.
Can the employees claim tax relief on this amount? I know that if employers pay a mileage rate that is lower than the approved rate, employees can make a claim, but this is slightly different: employees are paid the approved rate but for fewer miles than would be permitted by HMRC.
Has anybody come across this before?
Query 20,698 – Scrooge’s Friend.
New queries
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