April questions and answers

Newsletter issue - April 2017.

Q. I have recently become aware that one of my employees has been selling my stock and pocketing the cash. As the money has never gone in the till, do I have to account for VAT on it?

A. The VAT treatment depends on whether or not you've actually supplied the goods, what happened to them, who was responsible for them at the time and if you've issued a VAT invoice.

Generally, where goods are stolen, no supply is made by the business, and so no output tax is due. However, where goods have been sold and cash is stolen, the goods have been supplied and so output tax remains due on the sales.

In your situation, where goods have been sold by your employee from the business premises, supplies would be seen to have been made so you would have to account for VAT on those supplies.

If the employee sold the goods at a lower price and put that amount in the till, that would be the consideration on which VAT is due. An exception to this would be if you could satisfy HMRC that there has been collusion between the employee and the customer with the intention of depriving the business of the consideration. In that case HMRC may accept that there has been a theft of goods.

Q. I have recently sold a buy-to-let property in the UK, which generated a capital gain. Can I off-set this gain against a rental property development in Spain?

A. Unfortunately not! There is no rollover/holdover relief, or deferral of capital gains tax, caused by the sale of a UK residential property, by investing in another property, regardless of whether the new property is in the UK or overseas. The only exceptions to this is rule are: (a) the sale relates to a compulsory purchase order; or (b) in the case of a qualifying furnished holiday letting.

Q. Can I reclaim VAT on the purchase of a new car for my business?

A. You may be able to reclaim all the VAT on a new car if you use it only for business. However, the car must not be available for private use, and you must be able to show HMRC that this is the case. 'Private use' includes travelling between home and work, unless it's a temporary place of work.

You may also be able to claim all the VAT on a new car if it's mainly used:

as a taxi
for driving instruction
for self-drive hire

If you lease a car, you can usually claim 50% of the VAT. You may be able to reclaim all the VAT if the car is used only for business and is not available for private use, or is mainly used as a taxi or for driving instruction.

You can usually reclaim the VAT for buying a commercial vehicle (like a van, lorry or tractor) if you only use it for business.