What does an entertainer do about VAT for gigs in Sweden?
One of my clients is an entertainer and has three gigs planned in Stockholm this summer; he will invoice theatre companies for his fees in two cases, one of which is based in Germany and the other in Sweden; the other fee will be earned from a private individual who lives in the city.
As a second source of income, my client will import merchandise into Sweden from the UK to sell at the gigs for a profit. He will also buy some stock locally in Sweden and sell that as well.
I am confused about VAT, namely how Swedish and German VAT will apply, and also if my client will need to register for VAT in these countries or, because they are both in the EU, if the non-Union import one stop shop scheme is the best route? If so, I understand that registration in Northern Ireland might be the best option because of the Northern Ireland Protocol agreement?
I feel like a candle in the wind trying to work out the VAT issues. What do readers think?
Query 20,703 – Elton.
Farmhouse refurbishment
My client owns a farmhouse, which he lives in, surrounded by 170 acres of farmland, which is being farmed by a tenant under a long-term tenancy. I am satisfied that, when the tenancy has gone on long enough, the land will qualify for agricultural property relief (APR). The client now intends to refurbish the house, and he wonders if there is anything he can build into his plans to make some or all of the house qualify for APR as well – for example, parts of the house and attached barn buildings are currently used for farming purposes, and this could be extended or formally recognised.
Readers’ suggestions and views would be welcome.
Query 20,704 – Giles
Can gifts under payroll giving be backdated?
My client is a well-paid employee of a company; he is not a shareholder or director. His employer has recently implemented a payroll giving scheme and my client is inclined to make monthly gifts. As I understand it, the gift is deducted gross before PAYE income tax is calculated, so relief is given at the top rate. His annual bonus usually means that my client is a 40% taxpayer, but there have been years when he has only been liable at the basic rate. Two questions have come to mind.
First, I believe that charitable contributions made under gift aid can be treated as paid in the previous tax year. This might be useful for my client, but is this possible with gifts made under payroll giving? I think such payments do not appear on the P60 and, I understand, do not need to be declared on a tax return. If carry-back is possible, how is this claimed?
My second question relates to the relief that can be given under payroll giving. HMRC’s guidance at Chapter 4: Payroll Giving (see tinyurl.com/5n97ztk5) says: ‘There is no limit on the amounts that an employee can give from their pay.’ However, I see that HMRC’s form HS342, Charitable giving (tinyurl.com/yycfe4bt), says: ‘The amount of tax relief you can claim against your income each year is limited to the greater of £50,000 or 25% of your adjusted total income. You need to report your payroll giving donations on the additional information pages, so they can be included in your “adjusted total income” calculation for the purpose of establishing the cap on your income tax relief.’
Is payroll giving relief capped or is this simply part of the calculation to determine the limit for other tax reliefs?
Query 20,705 – Nicholas.
Expenditure out of capital
I am encouraging a client to complete IHT 403 during his lifetime, on the basis that it will make life easier for his executor if the ‘normal expenditure out of income’ exemption is in point when he dies. We can quantify the categories of income and expenditure on the form, which asks for a fairly crude calculation to show that ‘income after tax less regular living costs’ exceeds the gifts that are being claimed within the exemption. The form also shows that the gifts are ‘normal’, in that they are listed year by year. I note that the form specifically recognises that ‘income’ for this purpose includes non-taxable sources such as ISAs, which my client does not normally report to me. He has also recently received a large legacy from his brother. Clearly, if he gives that away, it would not be ‘out of income’ (nor ‘normal’); but can he choose to say that he met his living costs with that for one or more years, increasing the income available for gifts to family? I am not aware of any case law on this issue, so readers’ advice would be welcome.
Query 20,706 – Myrtle.
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