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On the move
Deductibility of business items in domestic move.
My client and his wife both work from home. He is a music composer and she runs a puppet theatre.
They have justifiably (in my opinion) deducted various elements of household expenses over the years. Now they are moving and have asked whether any of the removal expenses are deductible.
It is clear that the removal firm will be shifting considerable quantities of business assets, particularly in respect of the puppet theatre, but also musical instruments and computers. It seems likely that the job will cost more because of these items – in the client’s estimation, it will represent 50% of what is being moved. My questions are therefore as follows.
- Would it be possible to claim some of the cost as a business expense?
- Would it make any difference if the movers itemised the costs on their bill, or provided separate bills?
- Are the costs incurred on the basis of a personal choice (to live in a different house) and are therefore not deductible?
I look forward to receiving replies.
Query 19,471– Van Man.
Loan to participators
Loans to participators and family members.
Jake is the sole shareholder of TradeCo, a UK trading company. He and Rebecca are the only directors and they, with seven other individuals, are full-time employees of the company.
However, Rebecca is Jake’s mother.
In considering whether the exemption from the said charge, provided by CTA 2010, s 456(3), is available – condition A (loan below £15,000) appears to be satisfied, and so do condition B (full-time worker) and condition C (no material interest).
Do readers agree with my analysis?
Query 19,472– Participator.
E-book sales
VAT and MOSS considerations on electronic book sales.
I act for a corporate client which is a VAT-registered publisher. Historically, the company has only sold hard copy books, so has never had to account for output tax. The company recently issued Kindle versions of several publications, and has received the first payment from Amazon in respect of sales.
It is difficult to find any guidance from Amazon on how to treat these payments for VAT. Presumably they are liable to output tax because they relate to electronic services.
Does the publisher have to worry about the mini one-stop shop (MOSS)? And where does an Amazon seller go to find answers to these questions?
Query 19,473– Burned.
Dividing property deeds
Tax on transactions necessary to secure equity release funds.
My client’s residence also has two rental properties on the same site. These were converted to residential property from outbuildings many years ago and are accessed by way of a driveway and are, in effect, landlocked.
Ten years ago, my client took an equity release on his residence. To secure funding, a separate registration of the title deeds on his residence was made with the Land Registry. The other two properties and the land immediately around them were transferred to a separate title deed.
My client would now like to release equity through a buy-to-let scheme on the two rental properties. To obtain finance, each rental property needs to have its own land registry certificate of title with all necessary legal easements. Because he cannot transfer land to himself to effect the title split at the Land Registry, the decision was made to transfer each rental property to himself and his sister as joint legal owners and tenants in common. A declaration of trust would then be registered that the sister has no beneficial or equitable interest in the properties and holds them as a bare trustee solely for my client’s benefit.
The lending institution will not consider the rental properties as part of a trust or company, but will accept them owned jointly with a family member as suggested.
Assuming the client dies first, his sister, who is an executor but not beneficiary, will sell the properties and the net sale proceeds will be included in his estate. Because the equity release loan will continue until the death of the survivor, his sister would be a continuing party to mortgages over properties she has no equitable interest in and is holding as a bare trustee for my client’s benefit. If the sister dies before the client, he would retain the equity release as the surviving owner.
I am considering all tax issues for both parties concerned, now and in the future, and would appreciate any thoughts and guidance.
I hope Taxation readers can help.
