Do we have confirmation?
I have been re-reading John Woolley’s article about unused pension funds being brought into the chargeable estate for IHT (Taxation, 27 November 2025). I note that ‘Pension scheme death benefits that pass to the deceased member’s spouse or civil partner directly or indirectly (via income drawdown) are intended to be exempt from inheritance tax on the member’s death’. Is this confirmed to be the case, and if so, how do I make sure that the exemption applies? Is it necessary to make a nomination to the pension fund trustees to pay the fund to the spouse, or would it be enough if the spouse was entitled to the residue of the estate and the fund was paid into residue? Presumably the spouse would then be able to draw on the fund subject to income tax at their marginal rate, but would not suffer the double charge to IHT and income tax that is causing a great deal of angst.
Query 20,803– Bobby D.
Is UK VAT registration correct?
One of my clients is a UK-incorporated company with two directors who are both resident in France. The activity of the company is to carry out warranty work for its French parent company. There are no UK trading premises and our office address is used as the address for VAT registration. The fees charged to the overseas parent are outside the scope of VAT as a business-to-business (B2B) supply of services, so VAT returns always show net repayments.
An HMRC compliance officer has queried the use of our address and says that the company should perhaps be registered for VAT in France, where the directors live, and recover UK VAT paid on its expenses with an overseas refund claim to HMRC. In other words, invoices from the company to the parent would charge French VAT as a domestic supply there.
In our view, this would be incorrect because the decision-making process of the company is carried out by UK employees, the customers needing warranty work all deal with the UK staff and suppliers also issue invoices to our address, although they are always emailed to the client and not posted.
My concern is that HMRC might seek to disallow all input tax claimed in the past six years – since the company registered – on the basis that it never had an entitlement to register for UK VAT.
What do readers think?
Query 20,804– Paris Dame.
My place or yours?
My client intends to marry his long-term girlfriend. They each own a house, and they intend to keep both of them and to spend some time in each, much as they have done for the past 20 years. I know that they can only have one exempt main residence when they are married, and I presume it would be best to make the election rather than having to establish which is ‘main’ as a matter of fact. But how does the exemption work if they then sell the other house? Is the gain time-apportioned up to the date of the marriage (exempt) and afterwards (chargeable)? Would the seller benefit from ‘the last nine months’ as deemed occupation?
Query 20,805– Dinky.
Where is the trade carried on?
My client company sells memorabilia connected with films and the stage – original props, autographs of stars, rare photographs etc. It sources the material from all over the world but only sells in East and Southeast Asia in a number of high-end shops. The company does not sell anything in the UK and does not sell online. The owner lives in the UK and the company was incorporated in the UK: the owner believes that operating via a UK company gives the business respectability in its chosen marketplace. He oversees the company’s activities (he is the sole director) but most of the day-to-day work is done by employees based in East and Southeast Asia.
The company has generally traded profitably, but this year it is likely to make a loss. The owner has asked whether the loss can be carried back against last year’s profits. As I understand it, CTA 2010, s 37(6)(b) allows a loss carry-back if the trade was not carried out wholly outside the UK. How would that rule apply here? Is the fact that the director controls the operation in the UK enough to allow the loss carry-back?
Query 20,806– Star Gazer.
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