HMRC Section 36 notice

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    HMRC Section 36 notice

    Wondering if anyone has any experience with one of these please?

    I received a letter from HMRC a few months ago stating they were investigating my property affairs. I was told I could provide documentation regarding it to help but if I didn’t wish then they would complete the check on their own terms but may be fined for not assisting. I was fine for this to be the case as my property has only been rented occasionally over the last 15 years and I naively didn’t keep any records of dates, tenants, payments etc. The rent was always minimal, payments were mostly cash and it was a very casual affair for friends of friends etc. I was also not working at any point when the property was let out so non of the rental payments would have been taxable as it wouldn’t have taken me over my tax free allowance for any year.

    Recently though I’ve received another notice under Section 36 of the Finance Act where I’ve been informed I need to submit all documentation to HMRC within 30 days or face fines of £300, the £60 per day afterwards plus £3000 for each bit of information that is incomplete, inaccurate or wrong. The amount of information requested is staggering. They want information of every rental payment ever received since I first let the property out 15 years ago, details of every tenant, dates, tax payments, details of how much and when I paid mortgage payments and statements, repair costs etc etc. I simply have nowhere near the amount of information they state I need to provide as I never kept any details like this as everything was very casual.

    I was more than happy for HMRC to do their own investigations and come to the conclusion I owed no tax (or very little) but this latest request seems very overkill and while I know it’s my fault for not being above board on keeping this information and submitting tax returns over the years, it’s extremely worrying that I am going to be hit with large fines for no doing so.

    I’d be very grateful for any advice or experience on this. Thanks

    Surely you must remember some of the dates you took payment in cash, if not all. Put them on the date order, names of people on a spreadsheet. You will have mortgage statements and you will know your periods of unemployment. It is a lot of information, but as soon as you start, you will be surprised that it is actually easy task. Go over your bank statements for repairs and cheque or bcas payment. If you paid cash for repairs, then just say so on your spreadsheet.

    Considering the fact that you were unemployed when you took ad hoc rent payments , i am wondering if someone reported you to HMRC for a review? Why did you fall under their radar now ? Did you approach them yourself first.

    You will have to provide the information for them to conduct their review. perhaps approach an accountant for help. good luck


      Originally posted by KILOCHARLIE View Post
      I’d be very grateful for any advice or experience on this. Thanks
      You need to get a grip on this as soon as possible.

      You can't just ignore HMRC's request for information and let them go ahead and do "their own investigation", as you have just found out.
      When you have a source of income like a property rental, you have to tell HMRC and complete the paperwork that they advise you to complete, even if you don't have enough income to pay any tax.

      Not completing a tax return for any tax year you have income in is an offence in itself, with penalties for non-compliance and late filings, so you're at a considerable disadvantage and you're compounding it by not co-operating, and they'll basically throw the book at you.

      It might look like overkill, but your complete lack of co-operation is the trigger for this.
      HMRC don't investigate and find there's no tax owed, they assume you're a tax evader and want you to prove you're not.
      They aren't interested in doing the work you can't be bothered to do.

      Either get in touch with HMRC and start to co-operate in full, or find an accountant to do it for you, otherwise you're going to be paying out a large amount of money and you're likely to have tax investigations a lot in future.

      You should aim to limit the search for information to the last 6 years at least - because that's the period of time that a business is obliged to keep its records, and it's also, probably in this case, how far back HMRC are likely to be able to pursue the issue.
      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).


        There are ranges of fines for standard things like not producing tax returns.
        And they are usually set according to your level of co-operation.

        One problem you're going to have to overcome is your up to now complete lack of co-operation.
        Because that, plus your payment in cash and lack of any kind of records is going to look exactly like tax evasion.
        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).


          Was this the only cash no records enterprise you have been operating please?

          Complete honesty and prompt responses to HMRC the minimum tactic.
          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...


            As you claim never to have been working while the property was let then taxman will want to know on what you were living , unless you were claiming benefits they would have to assume you were getting enough rental income to live off .
            I Think worstways they will assume a market rent for 15 years plus non filing fines, maybe 10 or 20 grand due....
            Can you check council tax records for occupants ?


              It may help if your doctor can give you a medical letter stating approx date when you had a breakdown and suffered some memory loss.

              If your job income is below the personal allowance level each year during last 6 years , you are not owing unpaid tax .



                In your shoes I think I would be asking for a personal interview (maybe on Zoom these days) so you can find out exactly what they require. In my experience I have always found them reasonable and helpful and you can always ask for a supportive friend to also be present if you're nervous.
                Council tax records should give some indication of occupancy and taxman will be able to access these.
                Good luck


                  If you were unemployed and receiving benefits and didn’t tell them you may need to brace yourself for contact from the DWP too


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