Unpaid tax on a rental property - help please!

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    Unpaid tax on a rental property - help please!

    Hi all

    In brief, I need to sort out unpaid tax on a rental property. This came to light more recently when I started thinking about getting another one and reading up this, properly!

    I’ll try and keep to the basics but is quite involved.

    Property purchased in 1999 for 50k, not ‘that far’ off market value but did need a lot of work. For various reasons I didn’t do anything with it for 10 years until the council threatened forced purchase.

    In 2009 I borrowed an additional 20K for a full renovation, electrics, heating, kitchen, bathroom, damp proofing, basically the whole placed stripped and redone to make it lettable. I am either sure, or delusional, but seem to remember reading at the time that you didn’t need to pay tax on rental income until you started making £ from it and obviously getting on for 20k was a big spend and stayed in my mind.

    I luckily keep most things and for the first two years it rented at £895.00 pcm with a mortgage payment of £645.00, using the tax scout calculator it says nothing was actually due at that time?! It then changed to the same rent and £473.00 mortgage payment. Over time and better interest rates it is now £1075.00 with a £178.00 mortgage payment.

    This is one of those situations where ‘I really must read up on that properly, just in case’ and life gets in the way of life :/

    I noticed there is a let property campaign on the tax website which I guess is who I need to contact?

    I am unsure of things such as how far they go back? fines? do I get in trouble? how it works with tax amounts changing through the years? and now reading about changes next month it seems even more complicated, but I do want to sort this out properly!

    Any advice on the best way to do this is much appreciated.

    Many thanks!

    #2
    Your best bet is to go and talk it through with a local accountant.
    There's usually someone with 5 or 6 staff over some shops along the high street - you may need to look around a bit.
    It's bread and butter to them, and they'll know how to get the issue dealt with properly.

    There's the HMRC campaign and you should be relatively OK, but you'll have to pay the tax that you owe and may pay some surcharges and penalties.
    But HMRC is lenient if you go all in to pay what owe and cooperate fully.

    And, yes, for the record, you were delusional.
    If for no other reason than the renovation probably isn't allowed against income for tax purposes.
    If you were paying income tax during that entire period, you would have been liable for tax on the income from the start.
    It's called income tax, because it's a tax on income.
    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).

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      #3
      Ok thank you.

      I guess find an accoount with good reviews. I'll do it asap, thanks, I feel a lot better now, little conerning when you read about big fines and prison!

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