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Reporting on disposal of residential property.
I have never been completely sure about the capital gains tax reporting requirements when a client has disposed of what is undoubtedly his or her only or main private residence but where the total area of the property exceeds half a hectare.
One of my clients is about to sell a property with three hectares of grounds. I am confident in my own mind that the whole of those three acres are required for the reasonable enjoyment of the dwelling house, which is the statutory test, but of course this is always a grey area and HMRC may not agree.
Now I have to consider not only the normal tax return reporting but the new requirement to file an online return within 30 days of the disposal. Under normal circumstances I would make a white space disclosure on the tax return to say that a disposal had taken place which was, in the client’s opinion, wholly exempt from capital gains tax. However, do I have to do anything different now that there is an additional 30 days reporting requirement?
I would be interested in Taxation readers’ views on how I should advise my client.
Query 19,551 – Landed Adviser.
Out of time?
Payment dates for the job retention scheme.
As with many people, I suspect, I am struggling to understand the finer points of the job retention scheme (JRS).
One of the conditions is that, for the employer to qualify for the grant in respect of a particular individual, that individual must have been in PAYE employment on or before 19 March (I know that there is an exception for some people who were made redundant before then but were re-engaged, but that is not relevant to my question).
What is confusing for me is the reference in the guidance which says that the employee must have been notified to HMRC on an RTI submission on or before 19 March 2020.
One of my long-established client companies has two directors who have typically built up a loan account which is cleared in late March by a combination of salary and dividends: no other salary is paid during the year. This year the salary payment was made on 25 March. Does this create a problem under the JRS?
These directors have been in a PAYE scheme for many years and their existence is known to HMRC so I would have thought that this would meet the qualifying conditions, but I am concerned that HMRC will have not received any RTI submission for them by 19 March for the 2019-20 tax year and so may say that they do not qualify.
I would be worried if I did make a claim and then it turned out that they were not eligible, because my client is relying on my advice. Do Taxation readers see a problem here – the situation can’t be that uncommon.
Query 19,552 – Annual Man.
Intermediary
VAT on new pricing structure for financial service.
Our company acts for large charities, providing a financial intermediary service concerning online donations made to the charity by its supporters. We provide the link between a bank’s merchant services such as Barclaycard or WorldPay and the charity.
Our fee to the charity is made up of three elements: we charge 2.5% of the amount paid by the donor as a processing fee, plus a transaction fee of 3p for each payment. We also make a monthly management charge to the charity to cover the ongoing cost of support given, including maintaining the hosted system as well the cost of our staff in the payments department who provide support to the charities.
We have always treated our fees as a mixed VAT supply of exempt financial intermediary services and a standard rated management charge. HMRC has always accepted this basis of calculation.
However, we would like to amend our pricing structure so that we charge a larger monthly management fee and lower transactional charges – this will enable us to compete with other organisations that typically charge 1% of the donor payments plus 2p for each transaction.
This pricing change will increase the VAT we charge on our sales invoices, or could we argue that we only supply financial intermediary services that are exempt from VAT by virtue of VATA 1994, Sch 9 gp 5 item 5? This issue is important because our charity clients cannot claim input tax.
Can readers provide any assistance?
Query 19,553 – Sweet Charity.
Mother’s helper
The effect of a reduced salary on student loan repayments.
One of my clients has asked for some advice relating to her daughter. Towards the end of 2019, the daughter started a new job with a salary of £30,000. She had a student loan and this is being repaid through her wages.
Her mother tells me that the daughter has been furloughed recently by her employer and it seems likely that she will receive only 80% of her salary. Will this affect the student loan repayments and will this apply only for the months during which she is paid a lower amount or is there a cumulative effect over the year?
Also, if the daughter helps out in her mother’s business during these furlough months, either as an employee or on a self-employed basis, how, if at all, would that income be taken into account in calculating any student loan repayments for 2020-21?
I hope Taxation readers can advise. This is not an area in which I have a great deal of expertise.
Query 19,554 – Linda.
