Regular readers of this Blog will be aware that in recent weeks I’ve been both analysing the government’s tax raising options, as well as making a number of practical alternatives for Rachel Reeves to run through her number cruncher and perhaps implement.
So, with speculation running wild in the financial press as to how Rachel Reeves could fill her infamous ‘black hole’, I’ve decided to rummage through my internet postbag again. Hopefully I’ve found an interesting tax related question or two that you will find helpful. Today’s questions are:
- Can you opt to be paid in cryptocurrency?
- Must you attach a mileage log to your tax return?
- Is there VAT on sponsorship?
- Is a 2-seater Land Rover classed as a car or a van?
- Can I claim for baby oil?
- Is mental health counselling VAT exempt?
1.Can you opt to be paid in cryptocurrency?
I provide logistical services to clients who are mainly in digital services and have been asked by an increasing number of clients if I will take payment in cryptocurrency. My old accountant says no, as he says it will be likely to breech anti-money laundering rules. Is he right or is he just being over cautious?
Answer
A number of our clients take payments in cryptocurrency; so I have double-checked HMRC’s anti-money laundering rules and there are no special restrictions on being paid in crypto. Just make sure you keep a record of the value on your currency exchange, as it can vary wildly from day to day.
2. Must you attach a mileage log to your tax return?
I am a PAYE employee but have to use my car on behalf of work sometimes and have been told I can claim a mileage allowance at 45p per mile. I’ve seen the box on my Tax Return, but the notes say that I must have a supporting mileage log, do I send this as an attachment?
Answer
It is not yet compulsory to attach the mileage log but HMRC do have the right to contact you for a copy, if they’re so minded. I would merely fill in the white box alongside the mileage claim with your calculations, such as 1452 miles @ 45p per mile = £653.40.
3. Is there VAT on sponsorship?
Is there VAT on sponsorship? I’m involved in the running of a small, none-VAT registered charity and we’re organising a race, funded by sponsors. In return the sponsors get their name in the programme, on banners round the race circuit, etc. One of the sponsors, a Spanish company, has given us £5k but is insisting that it is invoiced by a UK VAT registered business. What can I do?
Answer
I would inform the Spanish company that in UK law there’s an exemption for charities which means that entry to a fund-raising event is exempt and any sponsorship associated with that event are also exempt. I would visit. https://www.gov.uk/government/publications/charity-fundraising-events-ex… and refer the sponsoring company to Section 4.7
4. Is a 2-seater Land Rover classed as a car or a van?
I’m looking to purchase a Land Rover Defender 90 or 110. The salesman said that this is a commercial vehicle as it only has 2 seats in the front and no side windows in the rear. I’d be grateful for your thoughts as to whether the VAT can be reclaimed or if it would be classed for Benefit-in-kind charges as a car
Answer
I’ve looked at this very question for a client recently, and my view is that a 2-seater Land Rover meets the definition of a van for all tax purposes, so no BIK and the VAT is reclaimable. I have not seen this view challenged by HMRC in any case law.
5. Can I claim for baby oil?
I am a professional bodybuilder and have a supplementary income from some gigs as a member of a Chippendale male stripping dance troupe. In both professions I use a lot of baby oil to make my muscles supple, with the bonus of making them shine in the spotlights. Given that I spend around £30 a week on oils, purely for work, can I claim it against income?
Answer
To qualify as a business expense, any expenditure must meet the basic HMRC test of being used “wholly and exclusively” for the purpose of your profession. As baby oil has a lot of other uses, regrettably the answer is no. However, given the quantity that you use, it may be worthwhile for you to write to HMRC for a ruling, but I wouldn’t hold your breath on them saying yes.
6. Is mental health counselling VAT exempt?
I am a qualified nurse practioner and provide medical counselling for conditions such as PDST and ADHD, together with a number of other similar disorders. My gross income level is now approaching the VAT threshold, but as the services I provide are therapeutic, especially for mental health, are they VAT exempt?
Answer
This is a classic, ‘it depends’ situation. VAT Notice 701/57 2.4 states “Where the service is principally aimed at the protection, maintenance or restoration of health of the person concerned, the supply is exempt’. So, at first glance, a broad reading of this would suggest that your services are highly likely to be exempt, but the following link should provide more clarity:
https://www.gov.uk/guidance/health-professionals-pharmaceutical-products-and-vat-notice-70157
