Here is my latest tranche of UK Tax Questions Answered. Each question is from a Tax blog reader which I hope will be helpful to you or at least you’ll find the answers interesting. The Topics today:
- Having a flutter
- Loss of earnings for jury duty
- Proforma Invoices & VAT
- How to account for grants
- Claiming back VAT on a third-party invoice
Question:
I am full-time horse racing tipster and run a subscription business, where I send my clients daily emails with tips on the day’s racing. I subscribe to the Racing Post which allows me to get more access and much greater information on horses and jockeys. My current accountant says because I have the odd bet myself, that it isn’t wholly and exclusively for business and won’t include it as an expense on my Tax Return. As I cannot do my job without the Racing Post, I think he may be wrong; do you have any advice please?
Answer
In my opinion your accountant is clearly interpreting HMRC’s guidelines incorrectly. The first and most critical criterion is, would you be able to operate your business without this specialist service? If the Answer is no, then it’s clearly a business expense and any private use, as long as its incidental, can be ignored.
Question:
I’m self-employed and have just been on two weeks jury duty and the Court has asked me to provide last year’s tax return signed by an accountant and a letter from him stating my daily earnings. I don’t have an accountant at present (he died recently) and my income fluctuates over the year, so I have no idea what daily rate I can claim, do you have any helpful advice please?
Answer
My first bit of advice is to appoint a new accountant ASAP; however he or she may not be prepared to certify someone else’s work. Also you’ve clearly misunderstood the Court’s requirements as accountants don’t sign Tax Returns, only the taxpayer does. I would suggest that you telephone HMRC and request a SA302 (evidence of your earnings) and send it in with a covering letter stating that on an annual income of £xx your daily income would be £yy and explain this is based on 232 days – 5 days per week and 5.6 weeks holiday pa. That should do the trick.
Question:
We recently hired some mobile offices/containers from a company with which we don’t have an account. They issued proforma invoices for the total hire period which we paid in full. They have issued some VAT invoices to us for part of the hire but not for the full amount that we paid. They say that we have to wait until their system generates the invoices as the hire proceeds. However, I think that given that we have paid in full upfront, that they should be issuing a VAT invoice for the amount that we have paid. Am I correct? Thanks
Answer
Yes you are. The receipt of the cash creates a tax point and the supplier should account for the Output VAT and you should get a tax invoice and deduction of Input VAT..
Question:
I am treasurer of a community sports club (limited) and we bought a trailer we use for carrying equipment and various other things and it is solely for the sports clubs use. The trailer cost around £6k and because of its use we got a number of grants from a national sports authority and local government to cover the cost. My question is how do I put this into the year-end accounts? Firstly, does the asset go in at full value? If so does the grant then go in the accounts as other income? Thanks.
Answer
Grants are generally considered to be taxable income, if it’s for expenditure that appears in your Profit & Loss account. However If the grant income is spent on an asset, such as a trailer, then the grant is not taxable but there is no capital allowance available on the equipment expenditure. .
Question:
My bookkeeper who does my VAT has said that I can’t claim back VAT for hotel stays charged to my business credit card stating Booking.com as no VAT number is shown by Booking.com. So I arranged to get a VAT invoice from the original hotel where I stay, but what concerns me is that the charge from the credit card says Booking.com and not the name of the Hotel who gave me the Vat bill. Can I claim the VAT in this case?
Answer
You bookkeeper shouldn’t have disallowed the VAT and if she’d checked on their website and read the T&C’s, she would have found:
“By making a reservation through Booking.com, you enter into a direct (legally binding) contractual relationship with the Supplier with which you make a reservation or purchase a product or service (as applicable).”
Therefore the supply is made by the hotel and you can therefore recover the VAT stated on the VAT invoice from the hotel. It’s amazing what information can be found in less than a couple of minutes using Google.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.