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Matrimonial home and only or main residence relief
I am confused by CG64470. I have a client who separated from his wife ten years ago, moving into rented accommodation for a few years. He fell in love again and moved in to live with his new lady in her own (owned) house. He had not, at this time, either divorced his wife or bought another property. Unfortunately, his new love only lived a few more years and, in her final months, when her terminal condition was realised, H did then divorce W1 and marry W2. W2 owned her home solely until her death but left him the liferent.
W1 now wishes to downsize so the former matrimonial house is being sold. When considering the periods for which H can claim only or main residence relief, CG64470 seems to suggest that I only need to consider properties in which H has an interest. Obviously, H has maintained his 50% interest in the former matrimonial home even though he has not lived there for many years but he did not acquire any interest in what has been de facto his main residence for the last few years until the date of W2’s death.
Am I correct in thinking then that, when considering which of his residences is his main residence for the purpose of only or main residence relief, it is his former home right up until he acquired the liferent interest, in which case, most of the gain arising on sale will be covered by relief?
Query 19,979 – Dizzy.
Reimbursing employees for petrol used for business trips.
With petrol prices at record highs HMRC’s published advisory fuel rates are proving insufficient to cover fuel costs incurred by employees being reimbursed for company car business travel.
HMRC guidance notes that ‘if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation’. It follows that if the business can evidence a higher actual cost of company car business travel, it can reimburse actual costs to an employee without employers’ tax/NIC consequences.
Short of an employee filling up their petrol tank at the start and end of any business journey to calculate actual cost, are there any less onerous methods of reimbursing employees?
Do Taxation readers have any thoughts on whether using the methodology in HMRC’s published rates, but applying actual petrol pump costs with a receipt as evidence and calculating a new rate per mile, would be acceptable? For example: say an employee has a company car with a 1401 to 2000cc engine, and can prove to have paid 190.0p/litre for fuel (863.7p per gallon). Applying HMRC’s ‘applied’ MPG published data, the rate per mile is 19.2p. That would be rounded to 19p per mile.
Query 19,980 – Anon.
Relief on loss on loans to failing company.
My client began an initially-successful limited company (Company A) in about 2008 as sole director and shareholder. After 2012, the business slowly declined and had become unprofitable by 2016.
He then began another company (Company B), again sole director and shareholder, which was profitable from the outset, and began lending considerable sums to company A, which now amount to well over £100,000 and are undoubtedly irrecoverable.
Company A is now dormant, but our client is anxious to obtain corporation tax relief on the loss of Company B’s money. I have explained the problems surrounding the companies being connected, and their trades being distinctly different.
There were losses for the last five years of trading so there is not even any terminal loss relief to carry-back.
Are there any viable ways forward?
Query 19,981 – Loss-Relief Seeker.
VAT on services for organising a wedding in Spain.
One of my clients is organising a wedding that will take place in Spain. The happy couple live in the UK. My client is based in the UK and registered for VAT.
When I looked at the legislation – VATA 1994, Sch 4A para 14A, I decided that my client will not need to register for Spanish VAT because a wedding is not included in the list where the place of supply for B2C organisational services is where the event takes place, ie, it is not ‘cultural, artistic, sporting, scientific, educational, entertainment or similar activity’, it is a private gathering between invited guests to celebrate the union of two people. The place of supply therefore defaults to the general B2C rule, so UK VAT is charged because that is where my client’s business is based.
However, when I looked at HMRC’s VAT Notice 741A, para 9.5, it includes a bullet point that the B2C place of supply for organisational services is where an event takes place for ‘wedding or party planning that includes attendance at the event’. This would indicate that my client needs to register for VAT in Spain and charge Spanish VAT because he will be attending the wedding with two assistants to ensure it runs smoothly.
Readers’ thoughts would be welcome.
Query 19,982 – Page Boy.
