We have been supporting our Tax Partner Pro members via our email and call back service. Here’s an overview of some of the more recent questions we have answered during May 24.
Q
My client is just about to acquire her first UK residential property. She is UK resident, h owever she is already a 1/3 member of an LLP which owns a 1 mixed use property in Germany, but part is residential part commercial – this property was inherited from a German relative and put straight into a UK LLP.
Does she have to pay the 3% second home surcharge on her acquisition here or what would need to be the value of the residential portion in Germany to not pay it?
Does this make her ineligible for first time buyer discount on SDLT?
A
Our view is that the client would lose out on their first-time buyer’s exemption as they already have a share in a partially residential property. Even though this property isn’t in the UK, HMRC consider property owned anywhere in the world.
This would also mean that the 3% surcharge will apply as the client will be deemed to own another property and has another residential interest.
Q
I have a question about travel expenses for my limited company client. It’s just one director and the services they provide are business coaching services.
They mostly work from home (80% of their time) but occasionally they rent an office and deliver the sessions from there.
I’m not sure what will be the correct treatment for the travel expenses and whether these will be allowable for the corporation tax purposes in the situations where they travel from home (which is also their permanent place of work) to that rented office for some sessions. They sometimes buy lunch while performing their duties from that office.
A
As your client’s home is their permanent workplace, any time spent visiting offices to deliver training sessions from there will be classed as a ‘temporary workplace’.
A ‘temporary workplace’ means that you attend the workplace for a limited duration or temporary purpose. If a director (or employee), is relocated to a temporary workplace from their regular base of operations (i.e., their home in this instance) for an extended period, the new workplace may still be classified as temporary if:
a) It’s anticipated to last under 2 years;
b) It’s expected to last over 2 years, but they’ll spend less than 40% of their working time there.
Any accommodation, food, and drink costs you incur whilst your client is working away from their permanent workplace are tax deductible for the company. It is important to note your client would need to ensure the costs are reasonable.
Q
I have a question about SDLT – a client is buying a freehold block, with 7 flats in one single purchase for £341,000 so an average of £48,700 per each flat. I am not too sure on the Stamp Duty treatment of this, would it qualify for Multiple Dwellings relief or ‘non residential’ rates, due to the criteria: ‘6 or more properties bought in a single transaction’ based
A
Providing there is no headlease and none of the flats are subject to a long lease the purchase of the freehold is treated as if it were an interest in the individual dwellings. As such, this would be a relevant transaction for the purposes of MDR relief.
If the conditions are met, MDR can be claimed but in almost all examples like this, this higher rate for additional dwellings will apply.
If MDR can be claimed and the average price of each flat is £48,700 then only a 3% SDLT rate would apply.
Q
Is it considered a supply and VAT chargeable and, subject to breaching thresholds, the trader (a company in this case) would need to register?
They’re a finance broker and lenders pay a commission, my take is that their services are more consultancy and therefore a supply and should be registered. They’re saying others in the industry aren’t charging VAT – so wondering if there’s an exemption somewhere?
A
If it is a commission earned in the provision of a professional service then it would be VAT-able.
However, commission received by an intermediary in connection with financial services are exempt from VAT if the role of the intermediary is simply to make an introduction. i.e the bringing together a person seeking a financial service with a person who provides a financial service.
So it depends on the scenario…
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