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Profits from eBay activity not disclosed on tax return.
My client died six months ago (in January 2022).
Her husband, who is her personal representative, has been going through her paperwork and found that she had not included any profits she made from eBay activity on her tax returns. She had properly declared all of her other income.
The eBay activity was not connected to her full-time self-employment. Her husband knows that she was an active seller on eBay and that while she mainly sold her own items, she also purchased goods for onward sale. We are probably talking in the region of a few thousand pounds of income a year.
What are his (and my) obligations here?
There was probably some taxable trading profit from the eBay sales but income from selling her own things would not be taxable.
I suspect that it would cost more in professional fees to sort this out than the tax at stake but clearly that can’t be a reason to ignore the problem.
What do readers recommend is done in these circumstances, bearing in mind that I prepared the wife’s tax returns for the years in question?
Query 19,971 – Worried.
Benefit in kind issues of charging electric cars.
An increasing number of clients are buying electric cars.
I’m confident that I understand most of the tax implications but the benefit in kind (BIK) charge question is causing me some headaches.
I understand that where an employer provided charging facilities at, or near, the place of work then the provision of electricity for the car is not a BIK.
On the other hand, if an employer provides a charging point at the employee’s home then a BIK arises.
What happens where the place of work is the employee’s home?
I have several owner managed businesses which operate as companies where there are no separate business premises and the owner works from home most or all of the time.
Can readers tell me which rule takes priority?
Query 19,972 – Electrician.
Were money transfers to children gifts or loans?
Unfortunately one of my HNW clients has been diagnosed with a serious illness and his prospects of long-term survival do not look good.
We have been going through his financial affairs in order to have as clean as possible a situation for his wife and family should the worst happen.
One issue has come to light. He has three adult children and for each of them he has provided (to use a neutral term) substantial amounts of money (£100K plus in each case) to help them get on the housing ladder.
I asked him whether these were loans or gifts and he say that that these were all informal arrangements. As the children started to earn substantial income and/or made a profit on selling their houses they would probably have paid back some money to him but nothing was ever fixed.
The distinction matters because if they were gifts then they would be PETS and, at least in some cases, an element of taper would be available and, depending on how long he lives, gifts would fall out of his estate whereas loans would be an asset of his estate.
This sort of informality (though perhaps not the amounts) must be very common in family situations.
What advice can readers give to help me to make life as easy as possible for the family?
Query 19,973 – Troubled.
Is there VAT on Uber taxi rides?
One of my clients is a legal firm that – post pandemic – has been doing a lot of visits to the premises and homes of their own clients. In many cases, they use the taxi app Uber for their travel to avoid parking problems.
My understanding is that Uber must now account for a VAT rate of 20% on their fees, following a lengthy litigation process.
This is because Uber – rather than the self-employed drivers they use – is now making the supply of passenger transport to the traveller and is registered for VAT.
The drivers previously supplied the travel but traded below the £85,000 registration threshold, so did not charge VAT.
However, my client tells me that when members of staff download an invoice for their trip, there is no reference to VAT being charged by Uber, only a comment about a tour operator scheme introduced in 1987.
Does this mean that Uber is not actually charging VAT and no input tax can be claimed by my client on these fares?
Readers’ thoughts would be very much appreciated.
Query 19,974 – Taxi Tina.
