April Question and Answer Section
Newsletter issue - April 2013.
Q. I have put my hairdressing salon up for sale as I can't face the hassle and cost of RTI. I am self-employed and not VAT registered, but the proceeds from the business sale will take me over the VAT threshold. Do I have to register for VAT and charge VAT on the sale of the business?
A. If you sell the business assets and goodwill together, so that the purchaser can pick up where you stop and carry on the business, it will be treated as being a transfer of a going concern and outside the scope of VAT. So you don't have to charge VAT on the business sale or register for VAT. More information about transferring a business as a 'going concern' is given in the VAT leaflet no. 700/9: Transfer of a business as a going concern.
Q. If my company buys the rights to the intellectual property I create in the form of blogs, websites and online presentations, is that treated as the sale of a capital asset in my hands subject to capital gains tax? If so, can I sell such intellectual property every year for £10,000, so the gain is covered by my annual exemption and I pay no tax?
A. There are two reasons why your plan won't work:
i. You and your company are connected parties. Any transactions between you and the company must be valued at open market value. Is your blog etc. really worth £10,000 on the open market?
ii. The Taxman's view is that transactions involving copyright will generally fall to be taxed as income receipts, not capital gains.
Q. Our son is now old enough to attend nursery. Can my company, as my employer, help out with the nursery fees?
A. Your company can provide you with childcare vouchers to be redeemed at registered child care providers, and the first £55 per week of vouchers will be tax and NI free. If both parents work for the company they can each get £55 worth of child care vouchers per week. However, if you pay tax at 40%, you can only receive £28 per week of vouchers tax free. Those that pay tax at the new highest rate of 45% (from 6 April 2013) can only receive up to £25 per week of tax free vouchers.
The company must offer childcare vouchers to all its employees who work at the same site, it cannot exclude any employees, but employees can opt out. However, only parents with children aged under 16 can qualify for childcare vouchers. There are a number of other rules which are set out in the HMRC booklet E18: How you can help your employees with childcare.