.png)
.png)
Company transfer
Transfer of non-UK subsidiaries to Gibraltar parent company.
My query relates to a group whose ultimate parent is a Gibraltar-based company (GCo).
GCo owns a wholly owned UK subsidiary which, in turn, owns three wholly owned non-UK subsidiaries. The three non-UK subsidiaries are all trading companies and have been for the last three years. The UK subsidiary wishes to transfer its three non-UK subsidiaries to GCo.
I have received conflicting advice on whether TCGA 1992, s 171 can be applied for the transfer.
Some have advised both the transferor and the transferee would need to be UK resident and some say that only one of the parties is required to be a UK company.
The alternative solution offered was the use of the substantial shareholdings exemption relief, where the three subsidiaries would be sold to GCo and the consideration on the sale would be eventually written off.
Readers’ comments would be greatly appreciated.
Query 19,975 – Sputnik.
Rent-a-room dilemma
Availability of relief on let property.
My client has told me that he is going to take the holiday of a lifetime next year and will be away from home for six weeks.
He intends to let out his house while he is away – he lives alone and does not own any other property.
He has asked me whether the rent will qualify for rent-a-room relief? He is aware of the financial limits.
My initial reaction is that it will but I have seen some suggestions that the relief is only available for lodgers, ie the owner must be in residence while a room is being let out to the tenant.
It is a condition of rent-a-room relief that the property is the recipient’s main residence for all or part of the income period.
The income period here will be the six weeks the owner is away and the property will surely still be his main residence throughout that period. So it seems to me that the statutory conditions will be met.
Am I missing something here? Is there actually a requirement that the owner must be living in the property while somebody else is there?
I look forward to readers’ replies.
Query 19,976 – Holiday maker.
Non-fungible tokens
Should VAT be charged on sale of NFT?
One of my clients is a successful artist living and working in the UK using both traditional and virtual media. He is VAT registered.
He has come to me because he is about to sell a non-fungible token (NFT) for a six-figure sum. The purchaser is a US citizen living in California.
His question is whether or not he should charge VAT. My initial assumption was ‘yes’ but I am far from certain. That is because I am not exactly sure what it is he is supplying for VAT purposes – is it an ‘electronically supplied service’, the transfer of intellectual property or something else?
That then leads to the question of where the place of supply takes place. I have just about got my head round crypto currency but NFTs are something else.
There must be other readers out there who have clients that have sold NFTs. Any advice from them on how to treat this sale would be much appreciated.
Query 19,977 – Luddite.
Building work in Dubai
Can VAT registration date be amended by HMRC?
I read with interest the recent VAT article written by Neil Warren ‘Number games’ (Taxation, 5 May 2022, page 22).
This article alerted me to a backdated registration problem for one of my builder clients.
The situation was the same as with Neil’s example, namely HMRC wrote to my client about him not being VAT registered, despite the fact that his self-assessment tax returns showed annual sales exceeding £85,000.
We agreed with HMRC that the registration should be backdated by two years.
However, having read Neil’s article, I now realise that we should have excluded some income from the registration test in relation to building work my client carried out in Dubai.
This income is outside the scope of UK VAT. If this income is excluded, the date of registration would be 1 October 2021 rather than 1 February 2020.
My question is whether it is too late to contact HMRC and ask for the date to be amended to 1 October 2021.
My client would be happy to sacrifice input tax of £8,000 relevant to the period from 1 March 2020 to 30 September 2021 but would save output tax of £17,000.
My client did not issue any VAT only invoices to his customers for the backdated period because – by and large – they are not VAT registered, so would not be able to claim input tax.
It would be interesting to know readers’ thoughts on this.
Query 19,978 – Dubai Dan.
