According to PIM4020 "Where the total relevant sums are below the exemption limit and all of the qualifying conditions are met, the taxpayer is automatically exempt ".
The taxpayer may elect not to have the exemption "so that losses could be utilised against other letting income outside rent-a-room ...", or, carried forward?
Is the property their main
Thnaks for replying - you've all made it much clearer in my mind.
Thanks for this response. It doesn't seem right to treat it as profit from trade but "Other taxable income" seems more appropriate.
Taxable or not
Four professional student friends have agreed to provide a one-off service over a short period of time for payment. Each friend receiving approximately £900. Would you advise that they declare it as taxable income, less expenses? Or would you consider this is not a bsuiness activity: it's one-off - there's no ongoing sales - but they may make a profit.
If so, could they offest the cost of their directly-related student fees against the income?
Thanks - much more useful
Many thanks for addressing the question I thought I was asking. I think you are correct: I should have asked "how do I dump them in it". that said, the debate has help me firm-up my conclusion.
The customer is, in fact, VAT registered, which may go some way to explain my level of confidence. I thought that confirming that the customer was making exempt supplies suggested that this was the case.
They are a commercial organisation providing vocational training to fee paying clients I concluded that this supply should be standard rated.
I would normally be reserved in my argument considering how complex VAT can be. The facts do seem even more conclusive to me now.
I see two issues:
If the customer's supply is being treated as exempt then my client's VAT is a cost to the customer.
At the same time the customer's onward supply is cheaper - when compared to other suppliers who do correctly add VAT.
Many thanks for your comments.
I must admit I didn't expect to be advised to question my own motives, when seeking professional advice about an ethical dilemma.
What to do?
One of my client's customer's in a similar situation: they are providing vocational training, are not an eligible body, etc., but are treating their supply as exempt.
I've advised my client that - I believe - the customer should be standard rating thier supply. Their customer would then be able to reclaim the VAT that my client has to charge - thus the proposed supply more competititve.
What steps does anyone advise we should do next?
Current rules came into effect on 1 January 2010 and one important aspect is that it is a B2B (business to busines) suppy, therefore the above rules now apply.
Completely the reverse (transaction deemd to take place in UK) if it is a B2C (business to customer) supply.
As stated, the supply is outside the scope of UK VAT but, to be absolutely accurate, is not regarded as "zero-rated". The supply simply does not attract VAT.
This is, obviously, why I love VAT.