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What is the best way for orchestra to get tax relief?
One of my clients is a keen amateur musician who is treasurer of his local orchestra. The orchestra is a charity but is set up as an unincorporated association. It meets all of the eligibility requirements for orchestra tax relief other than the important one of being a company.
I’ve seen it suggested that the solution to this is to set up a separate company which carries on all of the production activities on behalf of the orchestra. This seems very cumbersome for an amateur body. Would it be possible to covert the orchestra into a qualifying company instead? Would this require a fresh application to the charity commissioners and would the reserves of the existing association transfer across to the company or would they be left stranded in the association where potentially they would not be available to support the orchestra’s work as everything would now be in the company?
My client tells me that a lot of amateur orchestras do have a corporate structure to enable them to claim the relief so it must be possible. Can readers offer any advice as to the best way to proceed?
Query 20,463 – Toscanini.
Confirming full pension entitlement.
My client has logged on to her personal digital tax account (PDTA) and has reported her pension forecast to me. Her forecast is £11,541.90 – the full ‘new state pension’ – which she can draw from her 67th birthday in June 2028. It is ‘not a guarantee and is based on the current law’; she ‘cannot improve her forecast any more’. All that is routine. However, according to her National Insurance contribution record, she only has 33 full years of contributions at the date of enquiry.
There is one year long ago that is ‘not full’, and 2024-25 will, in due course, be another full year, but she will not be working in 2025-26. I thought that 35 full years are required for a full pension. Can she rely on what it says on the PDTA, or should she make a voluntary contribution in 2025-26 to make sure that she has 35 credits before June 2028? Is there anywhere other than the PDTA that I can confirm her entitlement?
Query 20,464 – Confused.
Tax relief on car dealership stock.
I have recently taken on a client that operates a car dealership through her limited company. The nature of business is very straightforward – the company purchases new and used motor vehicles, occasionally undertakes some repair work and sells them to customers of the public.
Cars are typically held in stock for a couple of weeks and up to six months.
Common sense, for what it is worth, dictates that tax relief will be available on the cost of motor vehicles purchased and sold in a given period – just in the same way it would have been with any other goods – that is, the profit calculated based on UK GAAP would be subject to corporation tax.
I was wondering, however, whether there are specific provision that, in effect, treat cars as ‘other’ assets for the purpose of tax relief being provided based on accounting profits rather than by reference to capital allowances and CO2 emission levels.
To this extent, a high-emission vehicle held on the balance sheet as trading stock at the year end, will attract no tax relief while it remains unsold.
If my thoughts are founded, what then differentiates this case from most other cases whereby corporation tax relief is only available on motor vehicles in the form of capital allowances?
Is this all to do with whether the item is a fixed asset (company car) or current asset (trading stock) on the balance sheet?
Query 20,465 – Dealon.
Is there VAT on improvements to luxury yacht?
One of my clients carries out interior furnishing work to luxury yachts owned by wealthy individuals. Most of his work is for UK owners and he charges 20% VAT on all of his services, both for the design work and subsequent fitting of fixtures, fittings and equipment.
He has been asked to do some work on a luxury yacht that is moored in France. He will travel to France to carry out the work, buying all of the goods from a supplier in the Netherlands.
The yacht is owned by a company registered in the Cayman Islands – I am not sure if this is significant? According to the yacht owner, there is no business income generated from the yacht from hirings or other sources.
My client has quoted 20% UK VAT on his estimate but the client says that is wrong and the services should be ‘VAT exempt’ because the boat is registered from the Cayman Islands.
UK, Netherlands, France, Cayman Island ... I am confused about the VAT treatment because there are so many countries involved. I would be interested in readers’ thoughts.
Query 20,466 – Sailor Sue.
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