National Insurance treatment of benefits while in the EU.
Our client is an EU-based employer that has an office in the UK that employs a number of staff, for which a UK payroll is operated. One of the employees is to be temporarily posted to the head office in the EU. They will be out of the UK permanently for the period of secondment, expected to be up to two years.
We consider that they will continue to be able to pay National Insurance in the UK during the period and will be able to avoid the foreign equivalent. They will pay tax in the EU and avoid same in the UK. The individual is a self-assessment taxpayer.
Our question regards two areas of benefits in kind and where they should be taxed and/or attract NI liabilities.
First, there is potentially the provision of a car. This would be provided by the EU company not the UK branch. Will there be a benefit in kind in the UK along with class 1A NI, and if so should the value of the car be based on UK or EU list price?
Secondly, the EU country in which the employee will reside has an element of both compulsory and voluntary health insurance, this being separate from other social security deductions. Do these give rise to a class 1A NI liability in the UK if paid by the employer?
Query 20,579– Conundrum
Will a tax return be needed for guitar group?
As well as being employed, my client runs a small group of adults who meet on a Saturday morning to play (or, as I understand it, try to play) guitar. Until now this has been fairly informal and a local community centre has allowed them to use a room at no charge.
Recently, the community centre has suggested that as the group has been running for a couple of years they should pay for the use of the room. In addition, a gig has been booked for which the group will need public liability insurance. There has also been a request from some teenagers who would like to join the group. My client is wondering whether a DBS (disclosure and barring service) check will be required, which will involve further cost. There is also the idea that a small PA system might be purchased for gigs and there is a possibility that payment might be received for appearances.
While the above costs are not huge, the thought has arisen of whether the group members should pay a weekly fee to attend and cover these expenses. The group is ‘fluid’ and numbers vary each week. My client is happy to keep records so that everything is above board and the group members are kept happy. My question is whether this will then be an ‘unincorporated association’. The idea seems to be that any profit at the end of the year will be retained to buy more equipment for the group or donated to charity.
Can readers let me know whether any tax returns or other declarations need to be made?
Query 20,580– Slowhand.
VAT due on gifts to theatre if seats are named after donor.
One of my clients is a VAT registered theatre – also a registered charity – and is currently raising £20,000 for important repair and improvement works to be carried out to the stage. As part of the fundraising exercise, donors can have a small plaque with their name on it on a seat of their choice in the theatre. Each plaque will only cost £10 plus VAT from a local supplier and one of the volunteers at the theatre will screw them to the chair without charge. However, my concern is that the engraved seat option is only available for a ‘minimum donation of £150’ – does this cause a VAT problem?
Should the £150 be standard rated as advertising revenue because the donor is having their name permanently displayed on the chair? Or is this a minimal benefit so the donations are all outside the scope of VAT?
If a donor gives, say, £200, should we only account for VAT on the minimum specified amount of £150, the other £50 being outside the scope of VAT?
Can my client claim input tax on the supplier invoices for making the plaques?
Query 20,581– Gilgood.
Father wishes to gift cash to married daughter.
My 81-year old, divorced client has sold his house and is living with his daughter and her husband. They want to move to a larger house, so his plan is to give them some of his available cash to help with that.
I am clear that it would be a gift with reservation of benefit (GWROB) if he bought the house and transferred it to his daughter and continued to live in it rent-free; the inheritance tax downside of the GWROB could be avoided if he paid a market rent for his occupation. But what happens if he gives his daughter £400,000 towards the cost of a £700,000 house? Would the same market rent avoid the GWROB, or would different conditions apply? Is there any better way of achieving the objective?
Query 20,582– Reserved.
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