Private Tuition, Travel Expenses, Official Errors, Golf Clubs and New Farmers Averaging Rules

Jun 15, 2016   //   by Ralph   //   Latest News

There have been some interesting developments what with the much publicised release of the “Panama papers” and the implications for some politicians. These of course are the items that hit the headlines but rarely affect the ordinary taxpayer. I intend to talk about the issues that the small business or individual has to deal with.

What is private tuition to qualify for the VAT exemption

A recent tax tribunal case further defines what can be treated as exempt for VAT when teaching a variety of subjects. The deciding factor is whether it is a subject that is ordinarily taught is schools. In this case although the tuition was related to GCSE course, and the lessons took place within the confines of a school. The problem was the lesson was motocross racing. A subject although taught in some educational institutions, not many, and therefore it failed on the ordinary test. This may seem an extreme example but is a salutary warning and those involved in giving private tuition need to ensure that the subject passes all of the tests before treating as VAT exempt.

Allowable travel expenses

HMRC have reminded employers that travel paid to employees to interviews, grievance procedures etc. are not undertaken in the performance of the employees duties and  therefore should be reported on the from P11D. In order to avoid the necessity to complete the form it may be simpler not to reimburse the employee unless their contract means you have to.

Interest payable because of an official error

HMRC tried to argue that their role was not to advise a business on the legislation but the tribunal disagreed. The taxpayer who sold herbal tea was twice advised by HMRC that the tea should be standard rated when in fact it should not.  When the VAT paid in error was refunded HMRC refused to pay interest on the basis that the VAT was overpaid was not due to an official error. Evidence showed that this wasn’t correct and the tribunal agreed with the taxpayer.

golfRefund of golf clubs’ VAT

HMRC have agreed to refund the VAT incorrectly charged on green fees of non-profit making clubs. They will repay 90% of the VAT incorrectly paid on the basis of unjust enrichment if the whole of the VAT was repaid. Does the principle of unjust enrichment only work one way?

New farmers averaging rules begin

As farming is such a cyclical industry it has been possible to average profits over a two year period. This has now been extended to allow profits to be averaged over five years.  The ability to average is not extended to limited companies. This extended period will be welcomed by those who have a longer cycle and will mean overall there may be less tax payable. It may be worth ensuring that capital expenditure takes place in the final year of the five to perhaps remove previous profits from higher rate.

Llangollen resident Ralph Robson FCCA can be contacted at the Wrexham office of TA Gittins & Company on 01978 264846 or on to discuss any of the above items or with any accounting or tax queries

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