VAT and Property Conversions

November 7th, 2011 by Mark Withers

Subject to a number of preconditions being satisfied, VAT incurred in connection with turning a property into a residential dwelling are refundable by HMRC.

One of the key preconditions to availability of a refund is that the building must be meant for separate use or disposal as a dwelling.

In the recent case of Gerard Silver -v- HMRC the First Tier VAT Tribunal ruled that a planning condition which restricted the use of the barn (which was being converted) to ‘ancillary residential accommodation to the adjacent farm’ meant that the necessary precondition as to separate use was incapable of being satisfied and a refund of VAT wasn’t therefore available.

This decision is consistent with that of the Upper Tribunal handed down in HMRC -v- Lunn.  In Lunn, the construction of a dwelling within the curtilage of a building pursuant to a consent which allowed the property to be used only for ‘incidental or ancillary residential uses’ meant that the condition that the property must be intended to be used as a ‘separate house’ couldn’t be satisfied (and the zero rating which would ordinarily be available in connection with the construction of a new build or residential dwelling wasn’t available).

These cases illustrate the importance of considering the VAT implications of any development at an early stage to avoid a nasty surprise when efforts are made to reclaim or obtain a refund of any VAT.

If you wish to discuss any issues raised in this blog please contact Mark Withers at mark.withers@parissmith.co.uk

Tags: , , , ,
Posted in Inland Revenue, Property | No Comments »

Non-residents limited to 10 days work in UK

April 5th, 2011 by Amanda Scally

Under the current rules individuals who are not resident in the UK can’t spend any more than 90 days in the UK but there are no limits on whether those 90 days are spent working.  HMRC has recently advised that “HMRC will generally accept that working in the UK for fewer than ten days in a year will not by itself prevent an individual claiming they have made a break with the UK because they are working full time abroad.  If more days than this are worked in the UK, whether an individual is working full time abroad will depend upon their particular circumstances”.

In the recent budget the Chancellor announced that there will be a consultation on the possibility of a statutory test for residency.

It is very important for anyone who is non-resident or is hoping to become non-resident but will continue to make visits to the UK and spend some of their time working to obtain advice on their residency position.  For further advice please email amanda.scally@parissmith.co.uk

Tags:
Posted in Family Matters, Inland Revenue | No Comments »

Trust and Inheritance Tax Avoidance Schemes – Disclosure required

December 10th, 2010 by Amanda Scally

HMRC have confirmed that they will go ahead with bringing inheritance tax on trusts within the Disclosure of Tax Avoidance Schemes (DOTAS) regime. HMRC plans to publish a list of known schemes and arrangements which will not require disclosure, however other schemes where there is a transfer into trust and a saving of inheritance tax is a main benefit, will need to be disclosed. HMRC have said the intention is that disclosure will be limited to new and innovative schemes, partly to increase HMRC’s knowledge base of such schemes. HMRC has confirmed that the mere claiming of a relief (eg Business Property Relief) will not require disclosure unless there are other arrangements involved. The regulations will be published at the end of January 2011 and will come into force with effect from April 2011. Practitioners and clients will be keen to see the list of schemes which are excluded from the DOTAS regime.

If you require any further information on the issues raised above or on inheritance tax planning generally please email amanda.scally@parissmith.co.uk

Tags: ,
Posted in Family Matters | No Comments »

Self Assessment Tax Returns

January 26th, 2010 by Barry Russell

In case you have not noticed, all Self Assessment tax returns for the year ended 5 April 2009 need to be submitted to HMRC by midnight on 31 January.  A failure to do so could result in a fixed penalty of £100.  Furthermore any tax payments required to be made for that year, together with interim payments for the current tax year, also need to be made by the end of this month to avoid interest charges arising.

Tags: , ,
Posted in Inland Revenue | 1 Comment »