Member Since: 9th Jan 2013
8th Sep 2021
Ok, I’m that case it sounds like it may be a case of Chinese whispers. I.e.
HMRC: if you don’t pay the PAYE in full and on time for months where a CJRS claim has been made, the claim is invalid and the CJRS is repayable.
Client: HMRC want me to just concentrate on paying the PAYE for CJRS months so I promised I would.
Time will tell
7th Sep 2021
Yes, I think there was a previous call around 12 months ago during which the officer asked that at least the PAYE be paid for months where a CJRS claim was made. They were certainly keen for those periods to be paid and I believe the client has not kept that promise for a few of the CJRS months.
1st Sep 2021
I are with you that the greed has been astounding. I’ve seen the same with furlough; with directors claiming and continuing to work, employers claiming for employees who are not on furlough etc. Disgraceful.
Rather than disengaging though, look at your responsibilities under the money laundering regs and report where warranted. That way, you can sleep at night.
30th Aug 2021
Thanks for the confirmation. I am now concerned about the ERS legislation. Shareholder 1 will not receive any new shares, but I don't think new shares have to be received for the ERS legislation to come into play. Director 1 will receive a post-transaction uplift in value, so I'm now trawling guidance to see whether this is indeed a concern.
I've now found out that they are not brother-in-laws, as there is no marriage, so I don't believe they are related parties for CGT purposes.
The plan is to do a PooS at nominal value i.e. £1.
Am I over thinking this? I just don't want to fall foul of any rules. I hope that the transaction is safe from ERS taxes, but I can't see how it can be, because of the transfer of value.
P.s. I have realised that the client isn't actually married so the parties are not brother-in-laws (not that this is relevant to ERS)
29th Aug 2021
I agree. The company is worth no more than 15k and probably closer to 10k. Not sure whether this would need to be agreed with SVD.
I think CPooS is the answer as it avoids the potential ERS tax charge.
3rd Aug 2021
Thanks for the response. I'm not even sure client has got as far as getting permission to work in Germany yet; I understand he is looking into this.
It is looking like a permanent establishment will be created by virtue of the company being operated overseas for more than 6 months, so I presume the French company idea is to avoid having to apportion profits between the UK and France? I.e. simply create a French company and the UK company invoices the contractor and then a cross charge is made by the French company?
Apologies if I've misunderstood.
28th Jul 2021
Thanks David, I've sent you a PM.
19th Jul 2021
Thanks David and Tax Dragon. I am going to research my obligations with regard to the power of attorney re. KYC / AML and apologies for omitting the POA information.
It’s a long time since I had a client with POA.
19th Jul 2021
Mee too! Reading between the lines, I think the crimes are of that ilk. As often in these cases (if I’m right) it is the family that suffer, and Mr B has been left holding the financial can.
19th Jul 2021
Thanks for the responses thus far. I omitted the important fact (when posting rather hastily) that Mr B has power of attorney to deal with Mr A’s financial affairs whilst he is in the ‘big house’.
So, my enquiry came from Mr B (brother of Mr A) who is in prison. I believe (albeit only through reading between the lines at this stage) that Mr A is in prison for historic crimes which I’m told he (still) denies. I didn’t ask for the specifics and they were not volunteered but I have my suspicions and if correct, the crimes don’t relate to anything financial.
Mr B (brother and POA) sold Mr A’s former home and purchased with the proceeds a home out of the area. The property is in the name of Mr B but is soon to be transferred into the name of Mr A.
Rental income exists, as, rather than leave it vacant in the interim, it has been rented out. Mr B has deposited all rents into Mr A’s bank account, minus any necessary expenses. I’m fairly satisfied that this property is (to all intents and purposes) held on trust for Mr A, as Mr A is benefitting from the rentals and is ultimately going to be the legal owner. However I would be happier if a declaration of trust had been drawn up at the time.
The second issue is that Mr A gifted another property (also let out) to his Sister, who apparently “didn’t want the property” and felt uncomfortable taking it, so she kept all rents in an account and paid the lump sum into Mr A’s bank account after he became imprisoned. She also drew up a will stating that in the event of her demise, the property should revert to Mr A.
Said sister has now passed away and the property is being transferred (pending probate) back to Mr A in accordance with the terms of the will.
Mr B (prospective client) believes (similarly to above) that the rental income (which has been paid to Mr A as a lump sum by the deceased sister) belongs on Mr A’s tax return for 2020/21 as he is the sole (ultimate) beneficiary of the rental income.
I understand legal vs beneficial ownership but in the case of certainly the second property, I don’t see anything that would support this being beneficially owned by Mr A, other than the fact that the rents have subsequently been transferred to Mr A’s bank account. Yes Mr A previously owned this property and yes he will soon own it again, but the part in the middle, in my opinion, does not amount to beneficial ownership on the part of Mr A. I suppose the prospective client could argue that a verbal trust existed?
There is no tax advantage to the rent being charged to one party over the other - HMrC will get their small amount of tax either way.
Just a very strange case that got me thinking so I thought I’d put it to the house!