Content seriesView full content series
Any Answers Answered: Can I still act for client?by
Now tax returns are a dim and distant memory, TAXtv's Giles Mooney and Tim Good look at two questions from the pages of Any Answers. The first concerns an incorrect claim for BADR, while the other is about the cycle-to-work scheme.
To view the full questions and AccountingWEB readers’ answers click on the links below. To watch the video, click the play icon in the box above.
The first questions comes from GSWB1954. The adviser has prepared a tax return for a client for 2023, including a CGT computation claiming business asset dispossal relief (BADR) and therefore 10% tax.
"Since filing the return in April 2033, it has come to my attention that the client is continuing to work in the same industry as a director in a husband and wife limited company," wrote the AccountingWEB member. "I have suggested that he reconsiders the claim and files an amended return, but he is reluctant to do so." GSWB1954 wants to know if they should cease to act as the client's adviser.
Mooney noted that the query actually becomes a money laundering question, tipping his hat to David Winch's thorough response in the thread, but he goes on to say that if anything it's not a question about BADR at all. Good agreed, saying that the fundamental point is whether the targeted anti-avoidance rule that applies where a company like this is wound up, and the reserves are distributed to the shareholder, will result in the distribution to shareholders being treated as an income distribution rather than a capital gain.
The second question comes from SA2016, who has a query about the cycle-to-work scheme. "I understand a company director/shareholder can purchase a bike in his company and reclaim corporation tax/VAT with no benefit in kind, but are there any upper limits on the cost; for example, some will buy one for £500 but other keen cyclists may want to spend up to £10k." The AccountingWEB reader wants to know if there are any issues with this, and Mooney simply concludes: "yes, there is."
Good said there are "urban myths abound" in the question. "First, the idea that whenever an employer provides a bicycle to an employee it can be tax-free under the cycle-to-work scheme." But as Good points out, the scheme does what it says on the tin: "It's an exempt benefit for the provision of bicycling equipment used to cycle to work, and the rule of thumb here is at least 50% of the time (preferably more than that) the bicycle should be used to cycle to or from the employee's place of work. But that is something too often forgotten."
For the latest episode of TAXtv visit PTP Interactive. TAXtv is a monthly tax update programme available as an annual subscription (11 issues plus budget editions) to view online, download from the internet or watch on DVD.