You don't have a valid tax invoice to claim all the VAT upfront, you have a schedule to claim the VAT on the payments.
When the van is sold, output tax will be payable on the sale proceeds which the purchaser will be able to reclaim. This has nothing to do with the VAT on your clients purchase.
HMRC are fairly clear when it comes to salary sacrifice – they say that the remuneration package is for the employer and employee to decide and provided that the appropriate tax on benefits is paid, they are happy. What you have identified is a by product of this thinking.
Childcare costs in excess of the tax free value becomes taxable. This is completely unaffected by the salary sacrifice. You can’t count part of the sacrifice as reimbursement of the excess cost because HMRC are blind to the former level of salary. This means that the effectiveness of the salary sacrifice is reduced but then the new approach to childcare benefits is producing winners and losers anyway.
You may have problems in law. The employer has limited rights to make deductions from pay without the employee's consent. I'm not up to date with the current position but you should investigate it first.
There is a large amount of confusion and ignorance amongst council officers about the VAT status of a council. Local authorities have special provisions under VAT law to recover input tax that relates to non-business activities. On face value these services offered by your client would relate to non-business activities and so the council will be able to recover the input tax.
As far as I am aware, each authority has a lead VAT officer as part of their finance function. You should have this query referred to this officer and not the one who is commissioning the work.
You should be speaking to your insolvency practitioner contact about this. If you don't feel you have the right relationship, should you be selling his services?
My answers
Looks like a finance lease to me
You don't have a valid tax invoice to claim all the VAT upfront, you have a schedule to claim the VAT on the payments.
When the van is sold, output tax will be payable on the sale proceeds which the purchaser will be able to reclaim. This has nothing to do with the VAT on your clients purchase.
Problem unsolved
HMRC are fairly clear when it comes to salary sacrifice – they say that the remuneration package is for the employer and employee to decide and provided that the appropriate tax on benefits is paid, they are happy. What you have identified is a by product of this thinking.
Childcare costs in excess of the tax free value becomes taxable. This is completely unaffected by the salary sacrifice. You can’t count part of the sacrifice as reimbursement of the excess cost because HMRC are blind to the former level of salary. This means that the effectiveness of the salary sacrifice is reduced but then the new approach to childcare benefits is producing winners and losers anyway.
Legal powers
You may have problems in law. The employer has limited rights to make deductions from pay without the employee's consent. I'm not up to date with the current position but you should investigate it first.
I work in Local Government
There is a large amount of confusion and ignorance amongst council officers about the VAT status of a council. Local authorities have special provisions under VAT law to recover input tax that relates to non-business activities. On face value these services offered by your client would relate to non-business activities and so the council will be able to recover the input tax.
As far as I am aware, each authority has a lead VAT officer as part of their finance function. You should have this query referred to this officer and not the one who is commissioning the work.
Hope this helps.
Maybe
You didn't say you were concerned. How was I to know?
Surely
You should be speaking to your insolvency practitioner contact about this. If you don't feel you have the right relationship, should you be selling his services?
Thanks Mr_awol
Yes it has become acceptable by usage but it doesn't stop me hating it!
Don't get me started or I'll have a rant over the use of homage in its French pronunciation instead of English.
Or the Americans having 'erbs instead of herbs.
I'm very nearly old enough to be an old git, just getting my training in early.
Hate it!
My pet hate, grrrr! The expression actually goes " The proof of the pudding is in the eating"
Rant over
I think...
...you need to look up the concept of materiality.
Mmm...
It would have been useful if you had explained that from the start.Calling the company Co. Holding does suggest a group structure.