When Is a Company Van Not a Van?

Call: 01782 594958 Email: [email protected] www.thursfieldstax.co.uk

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful. October 2017

ARE SPOUSES HMRC have recently won a tax primary construction is for the tribunal case where they were conveyance of goods or burden. WAGES FULLY seeking to challenge the Kombi vans and those similar have deduction for a wife’s wages in not previously been thought to fall DEDUCTIBLE? arriving at the profits of her into this category due to them husband’s business. The judge being designed to carry both agreed with HMRC that the goods and people. Historically, amount allowed as a deduction HMRC has offered a concession from 2002/2003 onwards for should be limited based on the vehicles of a very similar hours spent and appropriate construction, double cab pickups rate for the work done. (including both uncovered and covered models), if the payload The general principle here is that capacity of the pickup exceeds a the expense must be incurred metric tonne. HMRC accepts that wholly and exclusively for the these vehicles can be treated as a purpose of the trade. Traditionally van for benefit in kind purposes. when the personal allowance was The judge decided that the primary fairly low (e.g. £6,475 in 2010) it construction of the kombi van was was quite easy to justify the wages not for the conveyance of goods paid to the spouse at around that alone but rather that its purpose level. However, there have been was for the conveyance of both significant increases in the goods and people equally. This personal allowance in recent years means that the Kombi did not meet to £11,500 in the current tax year the requirement to be considered and it is important that wages paid to be a van and therefore for to the spouse can be justified. benefit in kind purposes it was a car. The same judge however decided that Vauxhall Vivaro vans WHEN IS A COMPANY converted so that they had two VAN NOT A VAN? rows of seats were vans!

The P11d benefits on company vans are generally much lower than company cars and where private use of the van is merely incidental to its business use by the employee, then there is no taxable benefit at all. But when is a van not a van?

In a recent tax tribunal case, the Similar rules apply for VAT judge agreed that a VW Kombi van purposes so contact us first if you that had been converted so that it want to check the correct tax had two rows of seats for treatment of the vehicle you are passengers was a company car not planning to buy. a van. MUST OWN 5% OF Under the employee benefit rules, a van is a vehicle where its ORDINARY SHARES Call: 01782 594958 Email: [email protected] www.thursfieldstax.co.uk

1401cc We can assist with your refund TO QUALIFY FOR CGT 13p 8p to claims if this applies to your (14p) (9p) ENTREPRENEURS 2000cc business. RELIEF 1601 to 11p 2000cc THERE MAY BE MORE In order for a shareholder to Over 21p 12p 13p TAX TO PAY ON YOUR qualify for CGT entrepreneurs 2000cc (13p) (14p) relief on the disposal of their DIVIDENDS IN shares, they must be an officer You can continue to use the previous JANUARY or employee of the company (or rates for up to 1 month from the date group) and hold 5% or more of the new rates apply. The rules for taxing dividends the company's ordinary share changed radically from 6 April capital and voting rights for 12 RECLAIMING FOREIGN 2016 with the removal of the months prior to the disposal. 10% notional tax credit and the The company must also be a VAT ON EXPENSES introduction of new rates of tax trading company or the holding on dividends. For many company of a trading group If your business has suffered taxpayers there will be more tax VAT on expenses incurred in throughout the same 12 month to pay on those dividends on 31 period. another EU country, for example January 2018. overseas hotel and restaurant In a recent tax case, the judge bills, then it is possible to Up until 5 April 2016, the 10% agreed with HMRC that in reclaim the foreign VAT. dividend credit meant that basic determining whether or not the rate taxpayers paid no tax at all on shareholders held the required 5% dividend income as the 10% tax on of the ordinary share capital, all of dividends was covered by the 10% the company's shares should be tax credit. For example, where a considered except those with a basic rate taxpayer received £9,000 fixed rate of dividend (preference dividends, this would be treated as shares). A lower court had £10,000 gross income but the 10% previously decided that shares with tax of £1,000 would be covered by no entitlement to dividends and the £1,000 tax credit. From 6 April voting rights could be disregarded. 2016 the same £9,000 dividend would now be taxed at 7.5% once The foreign VAT must not the £5,000 dividend allowance has ADVISORY FUEL RATE however be reclaimed on the been used making £300 tax due on FOR COMPANY CARS UK VAT return but by using 31 January. HMRC 's VAT online services system. These are the suggested Where dividends are received by a higher rate taxpayer, the loss of the reimbursement rates for The foreign VAT refund claims can 10% tax credit means that the full employees' private mileage be made either quarterly or 32.5% rate applies to dividends in using their company car from 1 annually but there is a de-minimis excess of the £5,000 allowance. September 2017. amount that may be reclaimed Thus, if a higher rate taxpayer quarterly. received £30,000 of dividends, Where there has been a change £25,000 of those dividends would the previous rate is shown in The conditions for being able to be taxed at 32.5% meaning £8,125 brackets. reclaim the foreign VAT are that the due on 31 January 2018. Last year business must: the tax on the same dividends Engine would have been £7,500 after Petrol Diesel LPG Size  be VAT registered in the UK deducting tax credits.  not be registered for VAT in 1400cc 11p 7p the EU country nor have a If you can let us have all of your tax or less place of business there documents as soon as possible, we 1600cc  not make supplies of goods or can let you know how much tax you 9p or less services in that EU country, need to pay next January so that except for transport services you can set aside sufficient funds. Call: 01782 594958 Email: [email protected] www.thursfieldstax.co.uk

DIARY OF MAIN Corporation tax for year to PAYE & NIC deductions, and 1/10 31/12/16, unless quarterly CIS return and tax, for month 19/10 TAX EVENTS installments apply to 5/10/17 (due 22/10 if you pay electronically) OCTOBER / Deadline for notifying HMRC of chargeability for 2016/17 if NOVEMBER 2017 5/10 not within Self-Assessment Corporation tax for year to and receive income or gains 1/11 31/01/17, unless quarterly on which tax is due installments apply

Date What’s Due PAYE & NIC deductions, and CIS return and tax, for month 19/11 to 5/11/17 (due 22/11 if you pay electronically)