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Former matrimonial home
My client is recently divorced and his wife remains in the former matrimonial home, while my client retains a half share in his own name. On his death this share will pass to his daughter.
The client has asked whether he will be entitled to the inheritance tax residential nil rate band on the value of this property in his estate. I know that the relief applies to a house that is occupied at death and this would be extended to the excess proceeds from selling a home to downsize, but I cannot see anything in the guidance that correlates to this situation.
I look forward to readers’ thoughts.
Query 19,619 – Seeker.
Construction skills
I act for a property company based in the Channel Islands, which is building a new office block in the UK. The company is VAT registered in the UK and has opted to tax the site, which will be rented out on completion. One of our suppliers provides training assessments and programmes to building workers who are employed by the company and working on this project.
The supplier has charged 20% VAT on its services, which we disputed on the basis that it is a non-land service for a non-UK business and therefore covered by the general business-to-business (B2B) rule; in other words, it is outside the scope of UK VAT.
The director of the supplier has refused to give a VAT credit because HMRC’s VAT helpline service told him that the VAT depended on the place of supply of the services, so the UK where the training takes place. The director has insisted we must pay the VAT.
My questions are as follows.
- Is the supplier correct to charge VAT?
- If not, can my client still claim input tax on the basis that he would be unjustly out of pocket, especially as the VAT issue was raised with the supplier so strongly?
Readers’ thoughts are welcomed.
Query 19,620 – Jersey Lily.
Virtual employment
Since the start of the coronavirus lockdown, the employees of several of my client businesses, particularly those in service industries, have been working from home. Much to some surprise, at least in a few of these businesses, things have gone very well and the firms are now thinking of allowing their employees to work from home permanently. The employers will be able to save on running costs and employees will save on commuting time and costs.
I understand that some employees are starting to think they could move to more rural locations. This seems to be becoming ‘a thing’. However, one client has said that several of their employees have wondered about moving abroad while continuing to work remotely, returning to the UK occasionally if needed for important meetings and the like. In fact, I recently heard that Bermuda is offering a ‘work from Bermuda one year residential certificate’ for such ‘digital nomads’.
My client employer seems willing to allow employees to work from abroad, although Europe seems a more likely choice. If employees move to another country, but work remotely for their UK employer, can readers summarise the UK income tax and National Insurance implications. Will the employer still be liable for PAYE deductions?
Query 19,621 – Nomad.
Coded out
We had a problem in December 2019 whereby our anti-money laundering renewal did not go through quickly enough. As a consequence, HMRC’s agent maintainer team switched off our agent codes for about seven weeks until early February 2020. This was despite our reacting as quickly as possible at that difficult time of year. We pleaded with the department to turn the codes back on by 31 January, but to no avail.
Despite HMRC knowing of the problems we were experiencing, it decided to add to them by sending penalty notices to the 62 affected clients, and then not attending to the appeals for about eight weeks. All, or so we thought, self-assessment tax returns were re-filed and all the penalties were cancelled.
However, in the confusion, three returns were overlooked. Those final 2019 returns were re-submitted just after the self-employment income support scheme (SEISS) deadline of 23 April, again with a suitable explanation.
So far, the SEISS unit is insisting that, although those 2019 returns have now been accepted and the penalties cancelled, it is refusing to issue SEISS grants for these clients.
I have tried to invoke the taxpayers’ charter and explained that parliament could not possibly have foreseen this eventuality, or desired it. I have also requested an immediate referral to the Adjudicator and have confirmed that we will ask our clients’ MPs to take this up in parliament. However, it seems that the department is just not replying so as to let another deadline tick by.
I have asked HMRC to consider in detail the legal and constitutional arguments I have put forward, but it seems reluctant to do so. Surely, as part of determining any appeal, the Revenue is obliged to respond, in some detail at least, to the legal points raised?
I should be grateful for advice from Taxation readers on what else we can do to help these clients. We believe they deserve success for their cases.
I look forward to suggestions on how we should proceed in this case.
Query 19,622 – Confused.
