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bigduckontax, Accountant
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We own a free-range egg production unit, and we live in

Customer Question

Hi. We own a free-range egg production unit, and we live in a park home on site. We need to replace windows in the park home. Can part of this expenditure be claimed against the business as repairs and renewals for self assessment tax and VAT purposes?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

My opinion is that as the business requires constant attendance on site then your occupation of the park home would be allowed as a tax free benefit.

Here is the Gov UK advice on the matter:

'Accommodation at the place of work is exempt if:

  • your employees can’t do their work properly without it, eg agricultural workers living on farms.'

The replacement of windows would escape any taxation if [same source]:

'If the accommodation you provide is exempt, you don’t have to report Council Tax, water and sewerage charges to HMRC, or pay National Insurance and tax. You also don’t have to report and pay if you arrange accommodation maintenance contracts with suppliers and:

  • you pay the supplier directly

 

  • the accommodation is for employees earning at a rate of £8,500 or less a year.'

Thus it depends on the emoluments being drawn from the business. If they go above the 8.5K figure then these costs whilst being paid by the business must be included in the tax and NI contribution calculations for PAYE or if not being paid through PAYE taken into account in your end of the year self assessment tax computation. In both cases it would constitute a benefit in kind.

In any event this replacement would constitute premises repair in your business and could be set against profits for tax purposes..

I do hope I have been able to shed some light on the position.

Customer: replied 1 year ago.

Thanks for this. Just a couple of queries - I presume that the £8,500 p.a. is for EACH employee - i.e. both my husband and myself, as we both work in the business and are registered as an equal partnership, so we would each be allowed up to £8,500? I wish we made that much profit !

Also, is the VAT 100% recoverable?

Thank you

Expert:  bigduckontax replied 1 year ago.

The legislation says 'employees' ie in the plural, so the answer is yes. I always understood chicken farming was so profitable! Just had to egg you on!

As you are not registered for VAT any VAT you pay on business purchases is allowable against profits. In other words you offset the gross payment.

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 1 year ago.

There is no money in egg production as the big supermarkets dictate the price we receive - same the dairy farmers. We are a VERY small commercial unit only 5,000 hens.

Regarding the VAT, sorry for any misunderstanding - the partnership IS registered for VAT, so can we reclaim on our normal quarterly return?

Thanks again

Expert:  bigduckontax replied 1 year ago.

Correct, you have it to T.

Eggs are a zero rated supply, even if dispensed from vending machines. That means that their sale is subject to VAT, but a rate of 0%. What an Alice in Wonderland world we live in! Thus you can reclaim all input tax suffered on business purchases. As you are probably aware there exists a scheme where certain items eg feed can be bought from suppliers without VAT being applied which merely means you don't pay in in the first place so your cash flow is improved.

If your reclaim of input tax is substantial you can always ask your local VAT office if monthly VAT returns may be authorised. I was the Director of Finance of an omnibus company, fares are zero rated, and monthly returns were submitted to recover the huge tax bills on fuel.

Customer: replied 1 year ago.

Thank you, ***** ***** happy with your answer. Our poultry feed and point of lay pullets are Zero rated, so we only VAT on shed repairs, range management, electricity etc, so our input VAT is not really large enough to warrant monthly returns, but thank you for the information.

Very helpful

Good bye!

Expert:  bigduckontax replied 1 year ago.

Delighted to have been of assistance.

Please don't forget my rating.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3371
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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