Let Property Campaign and past experience

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    Let Property Campaign and past experience

    Hi,
    The ex-wife and I had a couple of rental properties which we've rented out for the past 2.5 years. The initial intention was to use the properties as an investment for the future, but we divorced after a year and never put our tax affairs in order. After the divorce, I wanted to declare the income, but she didn't - it made things awkward and I never declared the income to HMRC.

    The profit made from both properties is around £20k per annum. I've recently been contacted under the "Let Property Campaign" and now need to declare the income. Does anyone have any past experience on this? I'm wondering what sort of fine I'd be looking at...

    #2
    Hi Jazz

    I went through the campaign a few years ago. It was pretty simple. If you have kept records of income and expenditure it should be easy enough to compete the submission. Also remember you can carry forward any losses.

    Some key things to think about though:

    1. Were you already required to compete a self assessment? If so, and you didn't include rental income your penalty will be higher.

    2. As you have received a letter from HMRC you will not get the most favourable penalty.

    3. You complete the submission and you work out yourself what penalty you want to offer and give reasons. Read through the online guidance to with out the penalty.

    4. You must offer to pay in full plus penalty. You can ask to pay in installments but this requires divulging all financial info to HMRC.

    5. I submitted before I got the letter so paid a penalty of 10%. I would imagine you will be in the region of 20% to 30%.

    Hope this helps. As I said, read through the online documents and you should be ok. Important thing is to not worry about it and get it done quickly.

    G

    Comment


      #3
      I should add, you declare your half of the income. What she does is up to her.

      Assuming you have already taken interest payments off profit...

      ​​​​​​If you are basic rate tax payer then I'd expect tax bill of £2000 and fine of £600

      If higher rate then £4000 bill and find of £1200.

      Comment


        #4
        Not to be nasty, but I hope the fine is as large as possible. I pay my blinking taxes, so don't much appreciate those who don't. I am glad HMRC is catching at least some -- to be honest I am surprised they don't catch more -- they have all the Deposit protection records, records from banks, and many disgruntled tenants. Why they don't advertised on a simple website for tenants to report the rent they have paid beats me.

        50K of undeclared profit at higher rate = 20,000 of unpaid tax. That should hopefully yield a fine of £5000 plus between you and spouse. It seems that this cheating was deliberate and knowing and was discussed.

        You will also suffer the more serious penalty of being on the HMRC radar for ever more.

        Good luck.

        Comment


          #5
          Welcome jazzapples:

          Good, pleased government is trying more actively to chase up on tax-cheats and those who are merely ignorant. Tax fiddling costs us each so so much more than do benefit cheats.

          And yes of course I've got things wrong in the past: Ended up with Sheriff Officers (Scottish court bailiffs..) banging on my door after I failed to do a tax return for 4 years: Demanded a large cheque: Which I gave them: They appeared uncertain of it's elasticity: I got it wrong: I paid.
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

          Comment


            #6
            Originally posted by theartfullodger View Post
            Tax fiddling costs us each so so much more than do benefit cheats.
            Yes. But not much more than "benefits" which should not be paid at all in any sensible society - those far eclipse any tax fraud (by individuals at least) and the sufferers are those deserving people who get totally stranded in our bankrupted and duped "benefits" society - like the mentally ill, the truly unable to work and so on.

            5 million on housing benefits - mostly lazy folk, not ill or unable to clean toilets mow lawns and care - while mentally ill folk get stranded. A disgrace.

            Comment


              #7
              Hmmmnnnn About half of the benefit spend goes on old people, like me. And, btw, the state pension keeps increasing very nicely thank you unlike, say, UC or JSA or ESA..

              I start by cutting farming subsidies (did no harm in NZ..) and the sovereign grant....

              Cheers!
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

              Comment


                #8
                Artful -- in casual conversation when most folk talk about benefits they are not talking about your "old age" pension "earned" mostly via paying national insurance contributions and tax (albeit not related to the quantity of that tax). Nor are they talking about the NHS, child benefit, free schooling, free prescriptions or eye tests.

                The old folk are an issue however - the chance of young folk getting these pensions of the golden age will be zero -- even if a Corbyn or similar financial idiot doesn't tank the economy altogether.

                Comment


                  #9
                  Oh right, "Child Benefit" isn't a benefit then...

                  I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                  Comment


                    #10
                    g373,
                    Thanks for the information. I'm a basic rate tax payer and there were a few months of the property being empty, so will see on the fine.

                    Did you process the tax documents and submit yourself or use an accountant? From what I've see so far, it's mostly a matter of diligent record keeping with the likes of Excel and then submitting the correct information, which doesn't look too tricky. I'm just wondering if I submit myself whether it'd get a lot more scrutiny? As opposed to using an accountant that the HMRC has already seen dozens/hundreds of submissions from and therefore they might be inclined to be more trusting.

                    Comment


                      #11
                      Hi again

                      I overlooked the fact that your profit was £20k per year so the tax and fine may be bigger. Was there a mortgage on these properties?

                      however, there may still be time register for self assessment for the 2017/18 tax year meaning there would be no fine for that year. When did you start letting the property?

                      I did it myself, no accountant, filled in forms, made the offer and paid and all was accepted pretty quickly.

                      The form will also ask you for details of who else is receiving any of the income so your ex-wife should expect to have to go through the process as well.

                      You'll get plenty of people trying to berate you and say how bad a person you are etc but you are putting things right now and that's the main thing.

                      G

                      Comment


                        #12
                        First of all, I'd give your wife a heads up that she's about to get "done" if she doesn't already know.
                        I'd guess she's received the same letter, but you never know.

                        I'd use an accountant. Find one that's done this kind of thing before.
                        They'll know what the standard penalties are likely to be, what staged payments are acceptable and make sure HMRC have everything they need.

                        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                        Comment


                          #13
                          I expect both you and ex-wife have to submit tax return for rental profit for 2016/2017 and 2017/2018 ( since you started letting 2.5 years ago and current year end profit cannot yet be computed ) .
                          So from the letting records of each property and for each year , you calculate the annual rental income , maintenance expenses and the surplus ( rent profit ) and apportion 50% : 50%. to yourself and ex-wife.

                          So I expect you will have roughly around £10K profit to declare for each year and pay tax at 20% plus some penalties for not submitting a tax return for last 2 years.

                          Comment

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