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Is there a tax reason why a lessor can’t buy a van directly?
My client leases vans and would like to purchase them at the end of the lease.
He has been advised by the lessor that he can only do this by selling the van to a third party and then buying it back off that third party.
I am concerned that there is a non-commercial step in the arrangement and wonder if HMRC could perhaps raise tax issues.
In particular, VAT seems to be a risk, but I have not been able to find a definitive answer as to why the lease company would suggest the third party route. I can see, however, that this is a common solution showing on a number of lease company websites, so it seems to be happening in the open.
If someone can explain why my client can’t just buy the van directly off the lease company I would be grateful.
Query 20,291 – Van Man.
Will share purchase via option prevent relief applying?
We have a client who has sold an unlisted shareholding which may qualify for investors’ relief.
The client is a director and shareholder of a company which loaned money to the company in question. As part of this loan the company received an option to subscribe for shares in the borrower.
The client then purchased the option from the company shortly afterwards at market value, before exercising it at a later date and subsequently selling for a significant gain, which is currently taxable at 20%.
We have wracked our brains and we are unsure if the shares being purchased via an option prevents one or more of the criteria for investors’ relief as listed in TCGA 1992, Chapter 5, Part V being met?
We would be very grateful for Taxation readers’ thoughts.
Query 20,292 – Year of the Dragon.
How does domicile apply for different taxes?
I have a client who acquired a domicile of dependence in Pakistan in 1971 when she married. She has lived outside the UK until recently.
She remains domiciled in Pakistan as a national. I am unsure as to whether that domicile fell away when she returned to the UK. I have searched far and wide and, to my puzzlement and frustration, I cannot seem to find a definite answer.
I believe the deemed domicile rules for inheritance tax, income tax and capital gains tax need to be reviewed separately as my client could be deemed domiciled for one and not the other.
If readers could point me in the right direction, that would be very much appreciated.
Query 20,293 – Worldly.
Is there UK VAT on commission for arranging an art deal?
One of my clients is an art dealer and is registered for VAT.
She has provided services to a UK-based client (business-to-consumer rather than business-to-business) who wanted to buy a painting from France.
My client travelled to France to act as an agent in the deal, and her services were provided in Paris where the painting is stored in a gallery. Her client did not travel to France.
My client’s work was to check the picture was in prime condition and also that the work is authentic. She also negotiated the final selling price and arranged for the transfer of money from the UK customer to the gallery, and the safe transport of the painting to the UK.
My client charged a 5% commission to the UK buyer on the deal.
My client never owned the picture, and her fee was wholly for work carried out in France.
My question is simple: is UK VAT chargeable on the commission as my client’s customer is based in the UK or does she need to register for French VAT instead where she did the work?
Query 20,294 – Turner.
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