Panto time
Although I do not specialise in VAT, I always enjoy reading Neil Warren’s articles in Taxation magazine. However, I hope that one of his ‘wishes’ for 2025 does not come true – namely, the abolition of the flat rate scheme (see his article ‘Panto time’, 19 December 2024).
As I am semi-retired, I spend a couple of hours each week in our village community shop. It is run and staffed solely by volunteers and sells a variety of goods.
Each item is priced, mostly by the supplier, and we have a till where we tot up a customer’s purchases. It takes advantage of the flat-rate scheme, so there is no need to identify the VAT treatment of each item.
I believe there is a provision in the till where we could separate zero-rated and standard-rated products, but I doubt if many of the volunteers would correctly categorise everything. Although most of items are food, the shop sells newspapers, stamps, household, sanitary and pharmaceutical goods. What would they do when one comes to the Jaffa Cake borderline? The alternative would be to invest in a new till with scanning equipment.
I have no idea what that would cost and I imagine this would entail someone being responsible for updating the system for different products and new prices on a regular basis.
So we may still be in the world of a few decades ago, but it works for a small shop with many volunteers, so please don’t suggest its abolition!
Goston.
Nursery business
The replies to the Readers’ forum query ‘Tax consequences of proposed gift of property’ suggest that gift relief will apply before private residence relief (Taxation, 30 January 2025).
However, I have a different interpretation from this as TCGA 1992, s 165(4) says, ‘the amount of any chargeable gain which, apart from this section, would accrue to the transferor on the disposal’. Therefore, as private residence relief is an exemption and does not require an election to be made and the highlighted wording in s 165(4) above, I would say that private residence relief would be applicable first and then subsequent gain would then be considered for gift relief.
We are dealing with the disposal of a furnished holiday let for a client, which was the client’s previous residence, where we see it working in the following order of priority: private residence relief, gift relief and any remaining gain could potentially be eligible for business asset disposal relief. Although this does not appear to achieve a fair result, this is my interpretation of the legislation so I just wanted to get your thoughts on this.
Anon.
