I think I have misled you all in how I described my question - sorry. The non-resident tax return was filed in the country where the client is now based and I am told is in order there (many working days between USA and Canada and other places resulting in being resident in neither). The split year treatment I referred to is in the UK for the year (17/18) of leaving to take up the overseas position. The client has always been tax resident in the UK up to that point.
Para 1.7 of statutory residence test is the third automatic overseas test - it refers to full time work over the tax year. But para 1.10 refers to the year or other relevant period in the case of split year Cases 1 or 6
Thanks both - perhaps I should have made clear that I was referring to pre-registration input VAT related to assets purchased and expenses incurred in previous accounting periods /tax years under the four years/six months reclaim rules.
You both have reached the same conclusion as I have, but I cannot see anywhere in the HMRC manuals where this is made clear. It must be a question asked many times before; I would have thought there would be a definitive answer which would make clear whether this windfall is income for tax purposes or in the nature of a non-taxable grant to a business.
In your comment above, I find it interesting that on the one hand you say "The VAT you have recovered is the recovery of VAT you have paid to suppliers and as such it has no P&L effect " (absolutely correct), then go on to say "If you have previously claimed that VAT as an expense then you have over-claimed expenses" which is incorrect for the time in which it occurred, in a tax year in which the business was not registered for VAT.
Maybe I am just being nit-picking but I really would like to know.
To the Innkeeper - like it; the advantage you have is that your client e-mails you before the event !!
Justsotax - you are of course correct and I am sure Stepurhan realised that too. In fact at the moment the business is still continuing (in a small way) but the magnitude of the losses means that the chances of relieving in the future are somewhere between highly unlikely and non-existent.
As for your comment on the client; I could not agree more, the point has been made strongly, on a number of occasions over recent months, but as to whether things would be any different if another "big idea" came along, I am not so sure !!
Thanks for the comment - fortunately in this case the comps are the same, but I read and reread the guidance notes and the manual pages and still was not convinced I would have completed it correctly had they not been !
If nothing else, I am happy that it was not a stupid question !!!
What I intend to do is to is to use the BKD approach which shows a set of accounts in line with the partnership accounts and then adjust. If I get any problems with this, I shall let you know.
My answers
From the questioner - appears to be covered by HMRC RDR3 page 38 - don't want to waste anyone's time.
Thanks
I think I have misled you all in how I described my question - sorry. The non-resident tax return was filed in the country where the client is now based and I am told is in order there (many working days between USA and Canada and other places resulting in being resident in neither). The split year treatment I referred to is in the UK for the year (17/18) of leaving to take up the overseas position. The client has always been tax resident in the UK up to that point.
Para 1.7 of statutory residence test is the third automatic overseas test - it refers to full time work over the tax year. But para 1.10 refers to the year or other relevant period in the case of split year Cases 1 or 6
Is the tax treatment the same as the accounting treatment - ie the costs are a deduction for CGT ?
Tax on Pre-Registration Input Tax ?
Thanks lionofludesch
I think you have summed up the question better then I
1 ) See it as a partial refund on his expenditure. (ie taxable)
2 ) It's not "income" for me. (me too, I think !!)
Which is it ?????
Tax on Pre-Registration Input Tax ?
Thanks both - perhaps I should have made clear that I was referring to pre-registration input VAT related to assets purchased and expenses incurred in previous accounting periods /tax years under the four years/six months reclaim rules.
You both have reached the same conclusion as I have, but I cannot see anywhere in the HMRC manuals where this is made clear. It must be a question asked many times before; I would have thought there would be a definitive answer which would make clear whether this windfall is income for tax purposes or in the nature of a non-taxable grant to a business.
In your comment above, I find it interesting that on the one hand you say "The VAT you have recovered is the recovery of VAT you have paid to suppliers and as such it has no P&L effect " (absolutely correct), then go on to say "If you have previously claimed that VAT as an expense then you have over-claimed expenses" which is incorrect for the time in which it occurred, in a tax year in which the business was not registered for VAT.
Maybe I am just being nit-picking but I really would like to know.
Thanks Guys
To the Innkeeper - like it; the advantage you have is that your client e-mails you before the event !!
Justsotax - you are of course correct and I am sure Stepurhan realised that too. In fact at the moment the business is still continuing (in a small way) but the magnitude of the losses means that the chances of relieving in the future are somewhere between highly unlikely and non-existent.
But again - thank you all.
Property Losses
Many thanks for that - worth asking !!
As for your comment on the client; I could not agree more, the point has been made strongly, on a number of occasions over recent months, but as to whether things would be any different if another "big idea" came along, I am not so sure !!
Corporate Partner
Hello again Carnmores
Thanks for the comment - fortunately in this case the comps are the same, but I read and reread the guidance notes and the manual pages and still was not convinced I would have completed it correctly had they not been !
MikeS
Corporate Partner
Thanks Carnmores and BKD
If nothing else, I am happy that it was not a stupid question !!!
What I intend to do is to is to use the BKD approach which shows a set of accounts in line with the partnership accounts and then adjust. If I get any problems with this, I shall let you know.
Thanks again
MikeS