Can error in relief claim be corrected?
My client is a graphic designer. Her work requires her to relocate often and find a base where her clients are. She currently lives in Bristol.
She very recently got in touch with me, understandably upset, because HMRC has refused her claim for principal private residence (PPR) relief.
She made her claim for PPR relief for a period of over two years from early 2018 to late 2021, when she was based in Birmingham.
The reason the department is citing for refusing her claim is that, at the that she made the claim, she was living at a different address (ie she was living in Bristol when her claim was for a period of residence in Birmingham). Essentially, it seems that she failed to update her current address with HMRC.
She wants to know if there is any way to work around this so that she can claim and receive relief for that period.
I am unsure how best to advise her, not having come across this scenario before.
Taxation readers’ thoughts would be appreciated.
Query 20,507 – Iggy.
Purchasing non-depreciating assets to defer tax.
My clients are a very entrepreneurial couple. The husband and wife have set up a partnership. About nine years ago, they sold one of their businesses and they used the proceeds of the sale to invest in other, depreciating, business assets.
Their daughter and son-in-law have also left their ‘9 to 5’ jobs and they have started ‘dabbling’ in the family business. For a number of years now they have expressed an interest in joining the parents’ partnership but they were told they had to make their own contribution in order to join in.
The daughter and son-in-law therefore saved up quite a substantial amount from their previous employment and, with that money, they bought land which they transferred to the partnership. Their proceeds on this disposal were also used to buy other business assets, which are also, unfortunately, depreciating.
The ten-year deferral period for the parents’ gains is about to expire, and the partnership (which now includes the daughter and son-in-law) is looking to purchase some non-depreciating assets in order to defer the tax again.
What proportion of the parents’ and daughter’s deferred tax will be able to be deferred again on the partnership’s purchase of the new asset? And how will their respective shares in the new asset be set to make it most tax efficient?
My clients are keen to make their new investments and I am unsure how best to advise them.
Could Taxation readers offer me some tips?
Query 20,508 – Dodo.
Tax implications if loan is repaid in accounting period.
My client’s company has just received a very large fee for work done, and is cash rich.
My client also has substantial funds, but all on time deposits that he cannot access immediately.
He would like to bridge the temporary liquidity problem with a loan.
I know that the consequences of a director’s loan are the potential taxable benefit and the corporation tax charge; but if he undertakes in writing to pay interest to the company at the official rate, and makes sure that the loan is repaid to the company within nine months of the end of the accounting period in which it is made to him, is there any tax problem? Would it even need to be reported anywhere?
Query 20,509 – Borrower.
Is there a VAT issue with equipment sold in Austria?
I act for a UK business that specialises in research and development for the farming industry; all of its income is taxable and there is no partial exemption or non-business use.
In 2015, the client purchased a major piece of equipment in Austria for £3m plus Austrian VAT and we reclaimed the VAT from the Austrian tax authorities; the equipment has remained in Austria since then and been used wholly for research purposes but my client has now accepted a deal to sell it to an Italian business for £500,000; it will be shipped from Austria to Italy by my client, ie delivered to the buyer’s premises in Italy.
I have received mixed advice about VAT and it seems that we can ignore it because the sale is zero rated for Austrian VAT purposes as an export of goods out of Austria.
Also, the UK’s final departure from the EU on 31 December 2020 means we no longer need to comply with issues concerning the EU’s VAT refund scheme.
What do readers think? We wouldn’t want to get this wrong. Query 20,510 – Mozart.
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