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Does stamp duty or SDLT arise on transfer of assets?
My client is considering the transfer of some of his assets to family and business associates, but I am a little unsure of the stamp duty and stamp duty land tax (SDLT) issues.
The client owns two commercial properties. One is let out to an unrelated business and another to a business in which she is a majority shareholder. If the properties were both transferred to her son, would SDLT have to be paid? I understand that there is no mortgage on one property, but there is on the other. Does that make a difference and would there be any advantage in this being paid off before transfer?
She also has shares in a private limited company that she would like to pass to a long-standing employee. Again, would there be stamp duty on such a transfer? Similarly, she has a portfolio of shares in public listed companies; would there be such a liability on a transfer of these?
I appreciate that there are other tax implications here, but I should be grateful if Taxation readers could clarify the stamp duty aspects.
Query 20,367 – Stumped.
How will proceeds of company sale be taxed?
I have a client who is an independent financial adviser (IFA) regulated by the Financial Conduct Authority (FCA). There are three directors and shareholders. The company was started in 1991 and the shareholders have been the same throughout. They now wish to sell up and retire but the FCA will not let them sell the shares, only the business. They paid nothing for the ‘goodwill’ which is what the company will be selling for £700,000.
According to my thinking, the company will have a capital gain of £700,000 and will pay 25% corporation tax on that. The shareholders will then want to wind the company up but it could be some time before the FCA will permit this.
As it is, the proceeds of the sale will be paid in three tranches over now, one year and then two years. During this time the company will not trade. When they wind up the company they cannot claim business asset disposal relief (BADR) as the company will not be a trading company for two years leading up to the dissolution. In fact, it could be some years before they are permitted to wind up the company by the FCA.
Has anybody else faced this problem and what is the answer?
Query 20,368 – Unsure.
Will free yoga lessons incur tax and NI liabilities?
My employer client has decided to provide yoga classes for their employees. The classes will be held immediately after work hours for those who wish to attend. The lessons will be open to all employees and directors, but attendance is purely voluntary. Depending on the numbers attending, the employer may also open to lessons to the employees’ family members.
My question is whether there will be income tax and National Insurance liabilities on the lessons. The employer will pay the yoga teacher a fixed amount for each lesson, but this is not linked to the number of attendees. Unless there is a tax advantage in doing so, the employer does not plan to charge the employees (or relatives) for the lessons.
Can Taxation readers clarify the tax and National Insurance position here please, if there is one? I understand that the cost of the lessons to the employer if calculated on a per person attending basis will be less than the employees would expect to pay individually. If there is a liability, can this be settled by the employer? Query 20,369 – Guru.
Should US or UK charity organise conference?
We are registered with the Charity Commission as a historical organisation, focusing on the lives and achievements of British politicians in the 19th and 20th centuries. We also have a separate charity registered in America, which is a completely separate entity but with the same objectives.
We are holding our annual conference in London later in the year and we are exploring the best VAT outcome. We will charge a ticket price for admission to the event; this will only include attendance to the lectures and active sessions plus morning coffee and afternoon tea on each of the three days. We will be charged 20% VAT on the hire of the venue and speaker fees by an agency. In other words, there is a big VAT liability on our expenses, which we would like to claim from HMRC. However, neither the UK nor US entity is registered for UK VAT because our income is mainly from donations.
The ideal outcome is for the £150,000 revenue from ticket sales to be charged without accounting for output tax or registering for VAT – the event should make a big surplus for our general funds – but to be able to claim VAT on the expenses from HMRC.
As I understand it, we can achieve this utopian outcome if the US charity is the event promoter and pays the ticket money directly into its US bank account, so they will not be subject to UK VAT. The US charity will then be able to claim the VAT on the expenses through the non-EU refund scheme by submitting form VAT65A to HMRC.
Is my understanding correct? Query 20,370 – Disraeli.
Queries and replies
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