Q. My company is considering purchasing a VW Caravelle for me to use as my family vehicle. It is sold by the commercial van centre rather than the VW car dealer. Does that mean the company can claim back the VAT on it?

A. VAT can only be reclaimed on commercial vehicles such as; lorries, vans, buses, or cars used for daily rental to customers or as demonstration vehicles in the motor industry. Irrespective of who sells the vehicle, if it is designed to carry people rather than goods it is a car not a van, unless it's a bus designed to carry 12 or more people. To qualify as a van it must have a payload of at least 1000Kg.

Q. I act as a DJ for parties and other events. For themed parties (e.g. Halloween, 1970s) I wear clothes to suit the occasion. Can I claim the cost of those clothes as an expense in my self-employed accounts?

A. The Taxman will not allow a deduction for the cost of ordinary clothes which are required 'for warmth and decency'. However, where the item is needed for safety purposes, like a hard-hat on a building site, the cost is allowable. The same applies for the cost of a costume worn to identify the person in a role, such as a barrister's legal wig and gown.

If your clothes amount to a costume for entertaining, then the cost is allowable. If you also wear those clothes for warmth and decency then the cost is not allowable. Try asking yourself: 'would I wear this when I am not working as a DJ'. If the answer is 'yes', the cost is not allowable.

Q. In September 2013 I started working through my own company but I haven't drawn a salary yet. Can I award myself tax free childcare vouchers as an employee of my company? I was previously on a salary of £50,000 with my former employer. Would that affect the amount of childcare vouchers I can receive tax free in this tax year?

A. As an employee of your company you can receive childcare vouchers. The other conditions of a childcare voucher scheme must also be met, For example, all other employees of your company should be offered childcare vouchers on the same terms. Your previous salary is not relevant to the amount of tax free childcare vouchers you can receive from your current employer. If your expected salary for this tax year (don't include dividends or bonuses you may receive), will be less than the basic rate band - pro rata over the rest of the year, you can receive the maximum of £55 of tax free childcare vouchers per week.

Q. I've just won a sports car! The snag is the prize is only available from the company's headquarters in Seattle, USA, although there is a cash alternative. Are there any tax implications of accepting the prize in the form of the car or as cash?

A. Most states in the USA impose a tax on competition prizes, but the awarding company may allow for that. There is no similar tax in the UK. If you take the car and ship it back to the UK there will be import duties and VAT to pay, so the cash alternative may be more tax efficient.

Q. The Taxman has written to me saying I missed a small pension worth about £800 a year from my last tax return. He hasn't noticed that I also missed it off the last four tax returns. What should I do?

A. Best advice is to come clean immediately and tell the Taxman about all the missing amounts of pension income for all tax years. There may not be more tax to pay if the pension provider has already deducted tax at your marginal tax rate. However, if there is higher rate tax to pay there will also be interest due at 3% and possibly a penalty. By confessing all without delay you can qualify for a reduced penalty, down to say 15% of the tax due. We can help you with those penalty negotiations and may be able to get it suspended for up to two years.

Q. After purchasing a residential property to let, I spent a considerable amount on kitchen refurbishments and a new central-heating boiler, before letting it for the first time. Can I claim those costs against the rents for tax purposes?

A. It depends on whether the property was capable of being let before you carried out those refurbishments. If it was legally safe to let it - then the expenditure was probably 'repairs' and is allowable. If the property was in such a bad state that it could not be let to anyone, even on a tiny rent, the costs are likely to count as improvements and will not be allowable. We need to look at the detail of what work was done, and the context of your entire lettings business before we give you a final answer.

Q. I'm going to represent my company on an official UK trade mission to Australia, organised by my trade body. It will involve meetings with Australian potential clients over four days in two cities. My wife will accompany me on the trip, but she will not take part in the meetings. We will stay on in Australia to enjoy a short holiday. How should I split the costs between business and personal?

A. Your wife's share of the costs, such as air-fares and hotel bills, are not a business expense, so you need to personally reimburse your company for those costs. Any expenses relating to the holiday part of the trip (e.g. hotel and car hire expenses) should also be borne by you personally, not by your company.

Q. My daughter is now studying at University, but she worked full-time after leaving school in June and had tax deducted from all of her wages. Can she claim that tax back now, or does she have to wait until the end of the tax year?

A. She can claim the tax back now, and doesn't have to wait until the end of the tax year on 5 April 2014 to receive her tax refund. She needs to complete form P50 and send to HMRC.

However, if she expects to work again in the Christmas holidays, she may want to wait until she has completed that stint of work to reclaim all of the tax deducted in one go.

Q. There is an offer in my area to lease an electric car for two years, to help test the electric charging infrastructure installed by the council. Can my company take advantage of the tax breaks if I lease the car?

A. No. If the lease for the car is in your personal name your company cannot claim the 100% capital allowances which are available for electric and low-emissions vehicles. If the car will be used for your business we can help you crunch the numbers to see if it would be worthwhile for your company to purchase or lease the car and claim the allowances. However, from 6 April 2015 there will be a tax charge for your personal use of the electric car.

Q. I formed my new company in November 2012 and my wife (Liz) became a director and employee of that company at that time. Liz is now expecting our first child in August 2013. Can our company pay Liz statutory maternity pay?

A. Unfortunately Liz has not worked for 26 weeks for her employer before the 15 weeks prior to birth, so statutory maternity pay is not due. There is nothing to stop your company from paying Liz her normal wages while she is on maternity leave, but as those wages do not amount to statutory maternity pay the company can't reclaim that pay from the tax office.

Q. I am a non-executive director of a number of companies. Can I offer consultancy services to those companies on a self-employed basis?

A. You can offer your services to those companies on a self-employed basis, but you need to have a clear contract which distinguishes your work as a consultant from work you do as a director. The self-employed tasks need to be invoiced separately and declared to HMRC as a separate business from your fees as a director.

Generally the fees for work you perform as a director should be taxed under PAYE. Legislation introduced in the Finance Act 2013 requires the IR35 provisions to apply to work done as officers where that work is charged through a third party, such as a personal service company.

Q. I am thinking of investing some money in premium bonds. Are there any tax advantages or disadvantages?

A. You won't receive interest on the money held in premium bonds but any prizes you receive from those bonds are tax free. The prize fund is calculated on the basis of a nominal interest rate of 1.3%. Thus if you hold £10,000 in premium bonds for one year, on average you should expect to win £130 as bond prizes over the year. However, that return is not guaranteed and you may win more or less. You could also win the big prize of £1million!

The premium bonds will form part of your estate for inheritance tax purposes, so will be subject to inheritance tax on your death if the value of your total estate exceeds the exempt limit of £325,000 (fixed to 2018).

Q. I run my own consulting company in the UK, which pays my Brazilian wife a small wage for answering the phone and preparing marketing materials. Can the company pay for her to complete an advanced English course at the local college?

A. Training for any employee can be charged through the company if it is relevant to the employee's duties or future duties. An ability to speak and write correct English is necessary for your business so the proposed English course is work-related training for your employee. Your company can pay for the course, and receive a tax deduction for that cost. There will be no benefit in kind charge for your wife. The company can also pay for travel to the course. You should list the duties your wife performs for the company, and both sign the document as part of her employment terms with the company. This description of her duties will justify the training cost, should the Taxman ever ask.

Q. My company provides website hosting for businesses based in the UK and in other countries. For VAT purposes is this treated as a sale of goods or services?

A. There is an easy rule of thumb to decide whether something is goods or services for VAT purposes: can you pick it up and hold it? Yes: goods, No: services. Website hosting can't be physically picked-up therefore it's a service. There are some complex VAT rules for selling services across international borders. You need to know whether your customer is in business or not. Broadly if the customer in another country is a business you do not charge VAT. We need to talk through the detail of what you declare on your invoice and what evidence to collect from your customer.

Q. I am self-employed personal trainer. I pay rent to various local gyms where I train my clients, supply my own uniform and make my own appointments. I have to look the part to get work, so I take body-building supplements. Can I claim the cost of those supplements as a business expense?

A. The supplements are a form of food, and as such it has a dual purpose; to keep you healthy and prepare you to undertake your work. So it is very unlikely that the Taxman would agree that your body-building supplements are tax allowable

Q. Is it true that my company can purchase a top-end touring bike plus safety gear, for me to use without any restrictions?

A. There are restrictions. For you to receive tax and NI free use of the bike your company must offer the use of bikes to all its employees, but the same quality of bike does not have to be offered to every employee. The bikes should be used mainly for work related journeys, such as getting to work, or travelling between different work sites, but personal use is not prohibited. Safety equipment can be provided by the company with the bikes. However, remember the bikes must remain the property of the company, or be leased directly by the company. There are tax implications if the company gives you the bike outright.

Q. I have decided to become VAT registered. Can I claim the VAT back on the van I bought two years ago, which I still use for my business?

A. You can reclaim VAT on goods and services purchased before VAT registration, but there are different time limits for goods as opposed to services. The VAT paid on goods held at the date of VAT registration can be reclaimed if they were purchased within four years before the registration date. VAT on services can only be reclaimed if the services were supplied for the on-going business with 6 months before the VAT registration. The van is classed as goods, so you can reclaim the VAT on purchase.

Q. I am employed by my company M Ltd, and my wife's company T Ltd. M and T have completely separate trades and operate independently. I currently take no salary from M Ltd and have a modest salary from T Ltd. However, HMRC have split my personal allowance 2/3 to the PAYE code issue to M Ltd and 1/3 to T Ltd. Can I get this changed, and if so how?

A. All you need to do is ring HMRC on the number shown on your PAYE code notice and ask them to change your PAYE codes. You will need to have your NI number to hand, and estimates as well as the expected level of dividends, interest or other income to be received in 2013/14.

Q. I've heard about the great tax breaks available under the SEIS scheme. Is this something I can use for my business?

A. The seed enterprise investment scheme (SEIS) provides investors in small companies with 50% income tax relief, and an exemption from tax for 50% of the gains they reinvest in SEIS shares (for 2013/14). However, you can't use SEIS to invest in a company you control, as the investor and his associates (basically close relatives), must not own more than 30% of the company. The trade undertaken by the company must also be less than two years old, so to use SEIS the company has to be undertaking a new venture, and be a new clean company.


If you have an idea for a new business and you are willing to involve other investors, you may be able to use SEIS to fund that business. But please talk to us first, as there are a number of trades that can't use SEIS, and other conditions to meet.

Q. My company has been trading since 1 March 2013, but my first sales invoices haven't been paid yet, so there is no cash available to reimburse me for the expenses I've incurred personally. Do I have to complete a P11D for 2012/13?

A. The annual form P11D reports expenses reimbursed to, and benefits in kind made available to the employees and directors. As you haven't been paid any expenses by the company, there is nothing to report on the form P11D. If you have any benefits in kind provided by the company such as a car a P11D would be required.

Q. Our son is now old enough to attend nursery. Can my company, as my employer, help out with the nursery fees?

A. Your company can provide you with childcare vouchers to be redeemed at registered child care providers, and the first £55 per week of vouchers will be tax and NI free. If both parents work for the company they can each get £55 worth of child care vouchers per week. However, if you pay tax at 40%, you can only receive £28 per week of vouchers tax fee. Those that pay tax at the new highest rate of 45% (from 6 April 2013) can only receive up to £25 per week of tax free vouchers.


The company must offer childcare vouchers to all it's employees who work at the same site, it cannot exclude any employees, but employees can opt out. However, only parents with children aged under 16 can qualify for childcare vouchers. There are a number of other rules which are set out in the HMRC booklet E18: How you can help your employees with childcare.

Q. If my company buys the rights to the intellectual property I create in the form of blogs, websites and online presentations, is that treated as the sale of a capital asset in my hands subject to capital gains tax? If so, can I sell such intellectual property every year for £10,000, so the gain is covered by my annual exemption and I pay no tax?

A. There are two reasons why your plan won't work:


i. You and your company are connected parties. Any transactions between you and the company must be valued at open market value. Is your blog etc. really worth £10,000 on the open market?

ii. The Taxman's view is that transactions involving copyright will generally fall to be taxed as income receipts, not capital gains.

Q. I have put my hairdressing salon up for sale as I can't face the hassle and cost of RTI. I am self-employed and not VAT registered, but the proceeds from the business sale will take me over the VAT threshold. Do I have to register for VAT and charge VAT on the sale of the business?

A. If you sell the business assets and goodwill together, so that the purchaser can pick up where you stop and carry on the business, it will be treated as being a transfer of a going concern and outside the scope of VAT. So you don't have to charge VAT on the business sale or register for VAT. More information about transferring a business as a 'going concern' is given in the VAT leaflet no. 700/9: Transfer of a business as a going concern.

Q. My family business is very traditional; the factory-floor workers are paid weekly, the management are paid monthly and the senior directors are paid quarterly. How will I report all these different pay dates under real time information (RTI)?

A. This is a problem, as the RTI system was designed on the basis that all employees on the same payroll are paid at the same time. Under RTI you must submit a report for the entire payroll called a Full Payment Summary (FPS), every time the employees are paid. Running the FPS with only say the weekly employees receiving pay will cause errors unless adjustments are done for those employees who are not being paid on that particular pay date. A solution may be to segment your payroll into weekly, monthly and quarterly runs, but you need to talk to your payroll software provider to check if that is possible, before you start to implement RTI.

Q. I run a small B&B which has three let bedrooms, my family uses the other two bedrooms of the property. How should I calculate how much of the property's running costs relate to the B&B business?

A. The answer is to include all of the property's running costs (power, rates and repairs) in your B&B accounts and take out, or 'disallow', an amount that relates to your family's use of the property. This is called a private use adjustment. In many towns the private use adjustment for B&Bs has been agreed locally with the Inspector of Taxes as a monthly or annual rate. However, from 1 April 2013 national rates of private use adjustment have been set by the Taxman as follows:

- 1 family member living in the premises: £350
- 2 family members living in the premises: £500
- 3 or more family members living in the premises: £650

Q. The Taxman has sent me a new PAYE code for 2013/14, which includes about £1000 of savings income taxed at 40%. I don't know how he got that figure as I don't have any savings, and I only draw dividends from my company up to the limit of the 20% tax band.

A. The Taxman has looked at the income reported on your tax return for 2011/12, of say £7,475 wages plus £35,000 gross dividends (total £42,475), and assumed you will continue to receive the same amounts of wages and dividends in 2013/14. However, in 2013/14 your tax free personal allowance will be £9,440 and the limit of the 20% tax band will be £32,010 (total £41,450). If you draw the same amounts from your company in 2013/14 as you did in 2011/12, you will be taxed on £1,025 at the higher rate (40% for salary, 32.5% for dividends). To avoid the higher tax rate you will need to restrict the amount you draw from your company in 2013/14, and tell the Taxman to amend your PAYE code on the basis of your estimated salary and dividends for the year.

Q. I run a landscape design business employing a dozen staff. The business is registered as a subcontractor under the construction industry scheme (CIS), and receives payments from the main contractors after deduction of tax. I'm worried that under RTI we won't be able to off-set the CIS deductions against the PAYE deducted from our payroll, so we will be out of pocket. Is this true?

A. Under RTI the CIS tax retained by contractors can be deducted from the PAYE you deduct from your payroll. However, you will have to show how much CIS tax has been deducted on your Employer Payment Summary (EPS) each month. The EPS must be submitted by the 19th of the month following the end of the tax month for which the PAYE was deducted.

Q. I plan to sign over my home to my son to avoid inheritance tax. Is there anything else I should be aware of before I do this?

A. If you continue to live in the property after you have given it to your son, the gift will not be effective for inheritance tax (IHT), so no IHT will be saved. For IHT purposes the property will be treated as belonging to you until you stop using it, so it will form part of your estate on your death and be subject to IHT. There may be a reduction in the IHT due if your son also lives in the property and pays his share of the running costs.

If you son does not live in the property there may also be capital gains tax charges when he comes to sell the property. We need to discuss this plan in detail with both of you before the gift goes ahead.

Q. My company designs websites. If my customer is a business in the Republic of Ireland can I apply zero rate VAT to the sales invoice? Do I need their VAT number before I can do this? Is the situation different if my customer is a private individual?

A. Website design is a service, so the VAT treatment depends on whether your customer is a business or not. You should retain some evidence to prove whether your customer is in business, but you don't need to hold its VAT number if your customer is not VAT registered.

Where your Irish customer is a business, and will use the service you provide for business purposes, the service you are providing is outside the scope of VAT. Your customer must apply the local Irish VAT to what it buys under the reverse charge rules. 'Outside the scope of VAT' means you do not apply VAT to your sale. If your business is VAT registered you will need to ask for its VAT number to report the sale on your EC sales list form. Only sales to VAT registered businesses are reported on that form.

If your Irish customer does not operate as a business, you must apply VAT at UK rates to your invoice, just as if your customer was located in the UK.

Q. My business has started exporting goods. I've heard I need an EORI number. What is it, and how do I get one?

A. The Economic Operator Registration and Identification (EORI) scheme started on 1 July 2009 and replaced the previous TURN system. The EORI provides a unique number for a business to quote to any Customs authority in the EU, for example when the business needs to make a customs declaration when goods arrive or depart from the EU.

If your business had a number under TURN, it should automatically have been issued with an EORI number. If your business is VAT registered in the UK you need to complete form C220 to obtain an EORI number, if you are not VAT registered the form to complete is C220A. These application forms can be sent by email to turn@hmrc.gsi.gov.uk

Q. The Christmas feasting has taken its toll on the waistlines of everyone in our company. Can I give the workforce a boost by having the company pay for gym membership for me and all my staff?

A. A company may provide sports or recreational facilities for its workforce, but unless those facilities are used mainly by current and former employees with exclusion of the general public, there will be a benefit in kind tax charge for the employees and the company. A membership for a gym open to any paying member from the general public would be taxed as a benefit for employees, the taxable value being the cost to the company of providing that membership.

If I purchase a Land Rover Defender for use in my partnership business can I reclaim the VAT paid on the purchase? I will use the Land Rover 75% for business and 25% for private journeys.

A. You first need to check that the specific model of Land Rover Defender is regarded as a commercial vehicle for VAT purposes by HMRC. You can do this by ringing the VAT helpline on 0800 010 9000.

If HMRC agrees the Defender is a commercial vehicle, you can reclaim 75% of the VAT paid on the purchase, on the basis that it will be used for business purposes for 75% of its useful life. You should keep accurate mileage records of all your business journeys so you have evidence of the business use of the vehicle, in case HMRC ask you to prove the business use percentage. If the percentage of business use of the vehicle changes you may have to make an adjustment to your VAT return.