Q
I have a client that is an invigilator and paid on PAYE. When I do the self assessment checker the last question asks if they are invigilator and then says they have to do self assessment.
I don’t understand why as they are on PAYE. Can you please clarify?
Also it looks like invigilators can claim journeys to work etc. Is that right?
A
Yes that is right.
If you are an Examiner, an Exam moderator (not quite sure how that is different), or an invigilator, you are required to complete a self assessment.
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Q
We have a client that owns 2 Furnished Holiday Lets and is selling one of them.
The property meets the criteria for being a FHL, and has been let as such for more than 2 years but I understand there may be an issue where only 1 of the 2 is being sold?
Is that correct, if so is there anything we can do to ensure that BADR applies?
A
That’s correct, the issue to contend with is that the conditions for BADR for a sole trader must ensure that all or part of the “business” is sold.
There is no other way to claim BADR, as this is the condition which will be relevant to your client in this case. The other conditions relate to selling shares in a company or an interest in a partnership.
Therefore, where your client sells only one property within the FHL business, it needs to be argued that this ‘part’ of the business is capable of being operated separately. This depends on the facts of the case.
It would be necessary to show on the facts that the property being sold amounts to separate, distinct and clearly identifiable part of the overall FHL activity as opposed to merely being an asset of the business which does not itself constitute a viable business in its own right. For example, if one has various properties all over the UK, this is more likely to be eligible than one who sells one unit from a single location that holds 5 other units which you continued to operate.
If very similar properties are let in each location, there is considerable overlap of the type of guests staying in them and the properties are very much run as one activity, then it may be more difficult to show that the sale of one of them would be the sale of part of a business.
However, if the properties are of a different size – say, a two-bed property in one location has been sold whereas the other property is operated as four, five- or six-bedded property – and it can be clearly shown that both the clientele and the marketing and advertising approach are different, then BADR should be available.
Its important that if you do believe BADR is available based on the facts then a disclosure is made to this extent in the clients tax return, presenting the reasons stated above and applying the facts.
You should take note too that there is a proposed abolition of the FHL regime from 6th April 2025 so it may be if they sell after this point, it may not qualify for BADR at all and instead potentially taxed at the CGT residential rates. However, due to the change in government we are waiting to hear on the outcome of these proposed plans.
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Q
- One of our clients, ‘Company A’ is owned by a holding company registered in Kuwait. The company currently operates two shops: a coffee shop and a cigar shop. We are planning to establish a new company and transfer the cigar shop, along with all its assets and liabilities, to this new company. The new company will also be owned by the holding company.
Could you please advise on the tax implications of moving the cigar shop to the new company?
- Additionally, the holding company has another subsidiary, Company B, which is also registered in Kuwait. In the near future, Company B will acquire 100% ownership of Company A. What will be the tax implications if Company B assumes full ownership of Company A?
A
I’ve added some initial comments below which hopefully will assist in the short term – you will appreciate this is only a high level view and we’ve not looked at the situation in detail – if you or the client would like more formal advice then we would be happy to provide you with a quote for the work.
- On the basis the current and new company are both part of the same 100% owned group then there should not be any real UK tax issues:
- From a CGT point of view any assets can move within the 100% group with no tax – the new owner just assumes the base cost from the old company
- Same for any goodwill etc
- From a capital allowances point of view the assets go across at tax written down value
- Any tax losses associated with the shop should transfer with the trade
- From a VAT point of view it should be a transfer of going concern so outside the scope of VAT (I assume the new company will also be VAT registered)
- Stock etc can be elected to go across at cost
- If any land or buildings are moved across then these should attract stamp duty group relief
Probably the one thing to check is to make sure that the Kuwaiti entity is actually viewed as a company by HMRC – can’t see why it would not be but some types of entity can be treated differently by HMRC. If it is a company with shares as we would recognise them it will probably be seen as a corporate entity by HMRC.
- Again on the basis that the move is within a 100% owned corporate group then there should not be any issues
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Q
Husband/wife Ltd company – 50/50 share holding. 2 shares they have been trading for several years – make circa 60k per year- distribute 40k in dividends and retain 20k.
They want to bring in their daughter as a 1/3 partner – will create another share and gift to her.
Business has net assets of 50k and share will pay dividend – so if we say for example co is valued at 75k,
She is therefore being gifted share worth 25k-
Is there any immediate tax implication for CGT etc – if so could a hold over claim be used.
A
If the transfer were to go ahead and the client do nothing, then yes CGT would apply to the transaction as it is a material disposal of value to a connected person.
However, as it is a trading company, a gift hold over election can be completed between the transferor and transferee to roll over the gain into the shares of the recipient, so the CGT would fall on the recipient as and when they dispose of the shares.
Next Steps
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