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October Question and Answer Corner

Newsletter issue - October 08.

Q. My sales have fallen off drastically in the last few months and my customers are getting much more price sensitive. Can I deregister for VAT and so effectively drop my prices?

A. If your total sales for the last 12 months have been less than £65,000, and you expect them to stay below this threshold for the next 12 months you can ask HMRC to cancel your VAT registration. This is not an automatic process and the VAT office may not grant you permission to escape the VAT net. You need to complete form VAT 7, which can be downloaded from the HMRC website, and give some convincing reasons on that from why your turnover is unlikely to rise about the compulsory VAT registration limit (£67,000) in the foreseeable future.

Q. I'm about to buy a shop with a flat above. Will the value of the flat be covered by the Stamp Duty holiday, and so be free of duty?

A. Unfortunately not. The Stamp Duty Land Tax 'holiday' only applies to purely residential properties where the value of the sale is £175,000 or less, and the deal is completed between 3 September 2008 and 2 September 2009. Commercial properties, and properties where there is both a commercial and residential part, such as your combined flat and shop, are covered by the commercial rates of Stamp Duty Land Tax which start at £150,000. There is no 'holiday' for these commercial properties.

Q. I held shares in the company I worked for, which was taken over in February 2008. The amount I received for those shares was less than I paid for them. Can I get any benefit from that loss?

A. If the company was not quoted on a stock exchange you may be able to set the loss against your income for 2007/08 or 2006/07, but you must have bought the shares directly from the company, not from another person. The company must also meet a number of conditions regarding its size and trade. If the company was quoted or does not meet all the conditions, the only option for you is to claim the capital loss on the capital gains tax pages of your tax return. You can then set the loss against any taxable capital gains you make in the future.

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