Is TOMS an option for Serviced Accommodation VAT? Reply

TOMS is the Tour Operators Margin Scheme (VAT Notice 709/5).

It is a special scheme for businesses that buy-in and re-sell travel, accommodation and certain other services (see paragraph 2.9) as a principal or undisclosed agent (that is, acting in your own name).

TOMS does not apply to:
# supplies you have arranged as a disclosed agent/intermediary and your commission is readily identifiable (see paragraphs 2.14 and 6.7)
# in-house or agency supplies you make which are not packaged/supplied with margin scheme supplies (see paragraphs 2.12 and 2.13)
# supplies you make to business customers for subsequent resale by them (that is, wholesale supplies), or
# supplies that are incidental to your other supplies (see paragraph 3.6)

If you are registered for VAT, you must normally account for tax on the full selling price of your supplies, but you can reclaim the VAT charged on purchases (subject to the normal rules).

Under the TOMS, you cannot reclaim any UK or EC VAT charged on the travel services and goods you buy-in and re-supply – the tax on such goods or services is accounted for in the relevant Member State by the providers of those services (hotels, airlines and so on).
However, as a tour operator based in the UK, you only account for VAT on the margin you make on your margin scheme supplies (see paragraph 2.7), that is, the difference between the amount you receive from your customer (including any amounts paid on behalf of your customer by third parties) and the amount you pay your suppliers.

A margin scheme supply is defined in law (see paragraph 1.2) as a ‘designated travel service’.
This means it is a supply of goods or services which is:
bought in from another person and re-supplied without material alteration or further processing, and
supplied by a tour operator from an establishment in the UK, for the direct benefit of a traveller – see paragraph 2.8

The following are always margin scheme supplies:
# accommodation
# passenger transport
# hire of a means of transport
# trips or excursions
# services of tour guides
# use of special lounges at airports

The reason why this would be useful for Serviced Accommodation is because often its done on Rent to Rent basis and the landlord supplies Residential Accommodation (which exempt from VAT), Serviced Accommodation is Vatable (if you cross the £85k threshold), so the VAT bill would be lower using TOMS. However, its not like a normal tour operator, normally they would buy in holiday accommodation not residential accommodation!

So before using TOMS you should get prior approval from HMRC after full disclosure of all the facts.

Surely in these circumstances HMRC would want the original landlord to change the status from Residential to Holiday Accommodation so that they will become subject to VAT?


How much extra tax do Property Investors pay? Reply

Recent tax changes such as Clause 24 Interest Restrictions, 3% extra SDLT and 8% extra Capital Gains Tax have hit landlords hard and these NLA videos explain the full impact

The NLA predict that the changes will mean that 20% of Landlords will sell their portfolios.

Since September lenders to Portfolio Landlords have been required to look at the whole portfolio before lending and this has lead to 70% of landlords with four or more properties saying that they have found it hard to obtain finance.

Overall Residential transactions have seen a slight decline in activity

Since 2015 more and more landlords have been using Limited Companies to purchase property investments even though mortgage interest rates are a around 1% higher there are many advantages:

  • Clause 24 Interest Rate Restrictions don’t apply to companies
  • Lenders can take a specific change and a debenture over a company and this is why separate companies for each investment can be an advantage
  • If you sell the company shares rather than the property the buyer will pay 0.5% SDLT on the shares, the capital gains tax on shares is 8% lower than on residential property and the potentially the company purchaser can takeover the existing debt without needing to refinance
  • Corporation Tax is 19% where as Landlords pay Income Tax rates, which means companies can help you to build a portfolio quicker as you retain more profit



Do you try to buy from local and UK suppliers? Reply

We are rapidly approaching BREXIT in March 2019 and its highly likely to cause currency fluctuations, that alone has to be a good reason to source products and services locally.

There are of course many other reasons such as:

  • Consumers are often prepared to pay for more locally sourced products
  • Its better for planet – why ship things hundreds of miles and pollute the planet if you can buy locally
  • It protects local jobs and services and helps the economy to grow

The Chartered Institute of Procurement and Supply reported

EU businesses say goodbye to UK suppliers as Brexit bites into key relationships
06 November 2017

Nearly two-thirds (63%) of EU businesses expect to move their supply chain out of the UK
Two-fifths (40%) of UK businesses are looking to replace their EU suppliers
25% of large UK businesses* have spent over £100,000 preparing their supply chains for Brexit
Nearly two-thirds (63%) of EU businesses who work with UK suppliers expect to move some of their supply chain out of the UK as a result of Brexit according to a survey from the Chartered Institute of Procurement & Supply (CIPS). This is a dramatic shift from May, when just 44% of EU businesses were expecting to move out of the UK.

So unless we start to support Local and UK businesses there could be significant consequence for the UK economy.



What if you don’t get your self assessment done in time? Reply

What if you don’t have all the information you need for the return?

Returns which include provisional or estimated figures should be accepted provided they can be regarded as satisfying the filing requirement.

A provisional figure is one which the taxpayer / agent has supplied pending the submission of the final / accurate figure

An estimated figure is one which the taxpayer / agent wishes to be accepted as the final figure because it is not possible to provide an accurate figure for example where the records have been lost. The taxpayer is not required to tick box 20 of the Finishing your Tax Return section of the return page TR 6 (or equivalent in a return for an earlier year) where estimated figures have been used

HMRC SAM121190

Is there a reasonable excuse as to why you can’t file the return?

A reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet, for example:

1. your partner or another close relative died shortly before the tax return or payment deadline
2. you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
3. you had a serious or life-threatening illness
4. your computer or software failed just before or while you were preparing your online return
5. service issues with HM Revenue and Customs (HMRC) online services
6. a fire, flood or theft prevented you from completing your tax return
7. postal delays that you couldn’t have predicted
8. delays related to a disability you have

What if you make a mistake?

If you make a mistake on your tax return, you’ve normally got 12 months from 31 January after the end of the tax year to correct or amend it.

White Space

The Self Assessment Return contain additional information boxes, these are known as white space, use these spaces to explain your calculations if you have any doubt about the answers you have given

Penalties for Late Filing

  • 1st Feb 2018 – £100 for missing the deadline
  • 30th April 2018 – £10 per day for 90 days after your are 3 months late (£900 in total)
  • 31st July 2018 – 5% or £300 which is ever is greater if you are 12 months late
  • 31st Jan 2019 – £300 or possibly 100% of tax due if deliberate

On top of these penalties there are also penalties for non payment

Why do we leave Self Assessment Returns until the last minute? Reply

It seems to me that there are basically two types of taxpayer and the split is pretty even.

The first type are ‘Organised Planners’, they prepare things as early as possible, work out what tax might be due and how they will pay it, look at ways to change things and file early. They will always pay less tax because they have had a chance to consider their options – Pensions, Gift Aid, SEIS, EIS and other things that reduce tax – they also tend to have a full set of records neatly posted on their accounting system.

The second type are ‘Just in Time’, whatever the deadline, they put things off. The problem with this is that often this means things get forgotten and paperwork gets lost, there is no time to prepare or plan and the tax will be payable immediately.

The added problem this year is that Credit Card Payments are no longer an option

In 2016, personal credit card payments for tax numbered 454,000 making of total of £741 million and resulting in £3.2 million in bank fees.

These payments were largely made by small businesses, looking to manage bulk payments by putting them on a credit card that could then be paid off over time.

Below are some statistics from HMRC from 2012, but I think that little has changed and the statistics will be similar this year.

I don’t think anyone would say they enjoy paying tax or filling in forms, so in some ways you can understand why some people put it off and do it ‘just in time’.

Last year HMRC reported

29 January was the busiest day with 513,271 returns completed – that’s more than 21,386 returns received per hour. The busiest time was between 14:00 and 15:00, with 50,358 customers – 14 per second – clicking submit.

If you haven’t done your return, do it now, don’t wait till 11.59 on 31st January.


Can I claim mortgage fees against property profits and reduce my tax? Reply

Yes you can! if you are property investor you can offset mortgage fees

The rules are in Income Tax (Trading and Other Income) Act 2005

Section 58

Incidental costs of obtaining finance
(1)In calculating the profits of a trade, a deduction is allowed for incidental costs of obtaining finance by means of—
(a)a loan, or
(b)the issue of loan stock,
if the interest on the loan or stock is deductible in calculating the profits of the trade.
(2)“Incidental costs of obtaining finance” means expenses—
(a)which are incurred on fees, commissions, advertising, printing and other incidental matters, and
(b)which are incurred wholly and exclusively for the purpose of obtaining the finance, providing security for it or repaying it.
(3)Expenses incurred wholly and exclusively for the purpose of—
(a)obtaining finance, or
(b)providing security for it,
are incidental costs of obtaining the finance even if it is not in fact obtained.
(4)But the following are not incidental costs of obtaining finance—
(a)sums paid because of losses resulting from movements in the rate of exchange between different currencies,
(b)sums paid for the purpose of protecting against such losses,
(c)the cost of repaying a loan or loan stock so far as attributable to its being repayable at a premium or having been obtained or issued at a discount, and
(d)stamp duty.
(5)This section needs to be read with section 59 (which provides for restrictions in relation to convertible loans and loan stock etc.).


Can I hold shares as a nominee for someone else? Reply

It is acceptable for a shareholder to nominate someone else to hold their shares, if the company’s articles allow it (Section 145 Companies Act 2006). Therefore, a shareholder could nominate someone to attend and vote at meetings in their place, or they could nominate a relative to receive their dividends if they wish. However, the nomination rights are restricted, in that shareholders cannot delegate the power to enforce any of their rights against the company or to transfer their shares.

In these situations, the share’s legal interest is held by the nominee, while its beneficial interest is held by the investor.

There would normally be a Declaration of Trust between the Nominee and the Owner.

The ‘legal owner’ is shown as the nominee on the register of shareholders, attends shareholders meetings and votes, the ‘beneficial owner’ is hidden provided they don’t own more than 25% or have significant control over the board, otherwise they would need to have their details disclosed on the PSC register.

Nominee shareholders can be useful for investors who want professionals to manage their investment, they can then delegate authority to the Nominee to make decisions on their behalf.

The Beneficial Owner will be taxed in the normal way on dividends and capital gains.



It’s Christmas – donate to a Charity with Gift Aid Reply

Bournemouth Chamber of Trade & Commerce

Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities or CASCs take your donation – which is money you’ve already paid tax on – and reclaim the basic rate tax from HM Revenue & Customs (HMRC) on its ‘gross’ equivalent – the amount before basic rate tax was deducted.

Basic rate tax is 20 per cent, so this means that if you give £10 using Gift Aid, it’s worth £12.50 to the charity.

A Gift Aid declaration must include:

  • your full name
  • your home address
  • the name of the charity
  • details of your donation, and it should say that it’s a Gift Aid donation

Higher rate taxpayers

If you pay tax at the higher or additional rate, you can claim the difference between the rate you pay and basic rate on your donation. Do this either:

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The Autumn Budget 2017 Reply

The Autumn Budget was on Wednesday 22nd November 2017 and the main tax changes are


  • The Personal Allowance will be increased to £11,850 for 2018/19 (from £11,500)
  • The Higher Rate 40% band will start from £46,350 for 2018/19 (from £45,000)
  • VAT limits frozen for 2 years
  • Dividend allowance to be reduced to £2,000 for 2018/19
  • CGT annual exemption to be increased to £11,700 from £11,300

Key Announcements

Stamp Duty (SDLT) removed for First Time Buyers

The relief works as follows:

  • consideration < £300,000 then no SDLT
  • consideration >= £300,001 and <= £500,000 then no SDLT of first £300,000 and 5% SDLT on the balance
  • consideration > £500,000 then no relief

The relief applies to transactions on or after 22nd November 2017

A first time buyer is ‘an individual or individuals who have never owned an interest in a residential property in the UK or anywhere else in the world and who intends to occupy the property as their main residence’

Business Rates and the ‘StaircaseTax’

£2.3 billion of support has been announced.

  • Indexation is being switched from RPI to CPI
  • Retrospective legislation will address ‘staircase tax’ and affected businesses will be able to ask the valuations office to recalculate valuations
  • Pubs will continue to get £1,000 discount up to a rateable value of £100,000
  • VOA will revalue every 3 years


An extra £3 billion to prepare for Brexit over the next two years

The money will make sure the government is ready on day 1 of exit. It will include funding to prepare the border, the future immigration system and new trade relationships.

£6.3 billion of new funding for the NHS

£3.5 billion will be invested in upgrading NHS buildings and improving care.

£2.8 billion will go towards improving A&E performance, reducing waiting times for patients, and treating more people this winter.

Economic Forecast

The Office for Budget Responsibility slashed its 2017 growth forecast from 2% to 1.5%.

Output, it added, would be weaker than previously thought in each of the subsequent four years.