March Question and Answer Corner
Newsletter issue - March 2010.
Q. I've just realised I missed £280 of income off my tax return for 2008/09, which I submitted online in January 2010. What should I do?
A. Although this is a relatively small amount you should correct your tax return for 2008/09. However, before you do so double check that you have also included all the expenses and deductions for that tax year, as it looks bad to the Taxman if you correct your return, or 'amend' it in tax-speak, more than once. As you filed your return online you can also amend it online, just log into the self-assessment online area of the HMRC website and pick your 2008/09 return to amend. You have until 31 January 2011 to do this. You may have some more tax to pay for 2008/09 if your extra £280 of income is not covered by losses, allowances or expenses. You should pay the extra tax due as soon as possible as interest will be charged from 31 January 2010.
Q. I was born in Croatia but I've lived in the UK for 20 years. I recently inherited an apartment in Croatia which is let out. Do I need to pay tax in the UK on those rents, even though I don't bring the money back to the UK?
A. As you were born in Croatia your home country is outside the UK, and you probably have the tax status known as 'non-domiciled'. This is not certain as your domicile for tax purposes depends on a number of matters, including whether you intend staying in the UK in the future. If you are non-domiciled you may be able to ignore your overseas income for UK tax purposes, if the total income and gains left outside the UK each tax year amounts to less than £2,000. However, you must include on your UK tax return any overseas income or gains you bring into the UK, known as a 'remittance'.
Where your overseas income and gains amounts to more than £2,000, you currently have a choice:
- pay an annual £30,000 tax charge and ignore your overseas income (which remains overseas) for UK tax purposes; or
- declare all your overseas income and gains on your UK tax return.
This a very complicated area of tax and you should discuss your personal circumstances with us before deciding what to include on your UK tax returns.
Q. My company was late submitting its VAT return and payment for the quarter to 30 September 2009. The VAT office has sent a surcharge notice, but the letter also says I can have the decision to impose the surcharge reviewed. Should I ask for this review?
A. If there were some exceptional circumstances that contributed to the late filing of your VAT return and payment, such as a death of a close family member, or a fire at your company premises, you may well have a reasonable excuse. In this case you should ask for the surcharge to be reviewed, but you need to do this within 30 days of the date of the letter from the VAT office. The reviewer will overturn the surcharge if they agree you had a reasonable excuse for late filing. You should provide a full written explanation of the circumstances that caused the delay, including any independent evidence you have, such as a report from the fire service.