Rental income not declared, and I face a Tax Inquiry

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    Rental income not declared, and I face a Tax Inquiry

    I have recieved a letter from the taxman for not declaring rental incoming. The taxman wants details of the past 6 years.
    I have one property that I let on a very small rent in order that it remains occupied instead of being left empty. In relaity over the period of six year I have never made any profit from the property and paid out a lot more than I have recieved.

    I would be grateful to any one who could advise on best way forward to resolve this.

    #2
    Originally posted by John K View Post
    I have recieved a letter from the taxman for not declaring rental incoming. The taxman wants details of the past 6 years.
    I have one property that I let on a very small rent in order that it remains occupied instead of being left empty. In relaity over the period of six year I have never made any profit from the property and paid out a lot more than I have recieved.

    I would be grateful to any one who could advise on best way forward to resolve this.
    Why not just disclose all income (such as it is) and the expenditure which exceeds it? Why was it not disclosed before now, too?
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

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      #3
      Originally posted by John K
      In relaity over the period of six year I have never made any profit from the property and paid out a lot more than I have recieved.
      It doesn't matter to HM Revenue & Customs if you find yourself in a profit or loss situation. You need to very quickly declare your income and expenditure for the last six years as requested - real real quick.

      You need to complete a self-assessment tax return every year thereafter.

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        #4
        re: rental income - need help

        Thanks, thats what I intend doing. Does any one know what this investigation process entials , what is the best way to manage it and what are the potential outcomes?

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          #5
          I am not an accountant. My minimal lay knowledge of potential outcomes is that you:
          • could owe tax
          • could be due a tax refund
          • could be fined
          • could be charged interest if tax is payable

          and/or any combination of the above.

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            #6
            If you honestly declare all the income and expenditure and you complete a SA return for the end of this month so HMRC can see what other income you have then they may just review it, write with a few extra questions and the matter may close. I doubt there are any refunds available as any renting ( business losses are dot deductible from normal PAYE type income but HMRC may carry forward your losses for use against future gains. You need lots of facts and receipts. If you are unsure contact a specialist in Tax Enquiries. Bill at www.wamstaxltd.com comes to mind. This adds considerable credibility to your presentation to HMRC. Regards Peter

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              #7
              Thanks for your advice. I have found it very helpful. Thanks again.

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                #8
                My girlfriend had the same letter after letting out her house for 7 years whilst being a student and travelling. They found out by some means (letting agent i guess) and asked for the last 7 years income/expense by SA forms. If you get them sent in and they look ok they shouldnt investigate, my girlfriend didnt. She had no tax to pay in the end either..

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                  #9
                  You should have completed the Land & Property pages for the relevant years.

                  However, the penalties (and interest) are based on the underpaid tax. So if there was always a Loss, there is no tax due nor any penalty.

                  HMRC might consider the omission to be the "tip of the iceberg" and widen the Enquiry.

                  Professional assistance might be prudent.

                  Comment

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