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March Question and Answer Section

Newsletter issue - March 2012.

Q. I've received a £100 fine for not submitting my tax return, but I don't remember receiving a form to complete. All my income is taxed under PAYE, so surely I don't need to complete a tax form, do I?

A. You should first ring the Self Assessment helpline on 0845 900 0444. Have to hand your NI number and your unique taxpayer reference number (UTR), if you know it. The Tax Officer will confirm whether you need to complete a tax return for the year to 5 April 2011 or not. If you do need to complete a tax return for that year you should do that online, if you submit a paper form now you will receive an even higher penalty. We can help you submit your return online, if one is due.

Q. I hold the lease of a property comprising of a shop on the ground floor and offices above. The shop is vacant and only one of the offices is let. I've received a good offer from a property developer to purchase the lease of the whole building. If I invest in another commercial let property can I rollover the gain and avoid paying tax on the sale of the lease?

A. It is possible to rollover gains made on land and buildings used by trading businesses or which are let to trading businesses that are connected to the building owner. However, letting of property is not regarded as a 'trade', so you can't rollover the gain you make on selling the lease of this building. Even if your own trading company occupied a part of the building, rollover relief would only be available on the proportion of the building it occupied.

Q. My bakery shop is VAT registered, but I don't add VAT to the bread and cakes I sell. I'm going to start selling take-away filled rolls, fizzy drinks and hot pies. Will I have to charge VAT on these items?

A. Most food is zero rated for VAT, which for a VAT registered business such as yours, means you add no VAT to your bakery products but you can reclaim VAT on your business purchases. However, once food is supplied in the course of catering, or as hot food to eat straight away, the standard rate of VAT (20%) may apply. The rules of what must be standard rated and what should be zero rated are quite complicated, and are set out in detail in the VAT notice 701/14: Food. We can advise on what products you should apply standard rate VAT to.