Rental income not declared, and I face a Tax Inquiry

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • 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).

    Comment


    • #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.

      Comment


      • #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?

        Comment


        • #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.

          Comment


          • #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

            Comment


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

              Comment


              • #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..

                Comment


                • #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

                  Latest Activity

                  Collapse

                  • tax rate question
                    vik2001
                    Im trying to figure out whether im going to be a high rate 28% or low rate 18% tax rate payer on CGT when selling my property.
                    is this how I work it out for 2017/18:

                    Work Salary before tax deductions is £40,000
                    Personal Allowance 2017/18 is £11,500
                    £40000-11,500 =...
                    20-07-2017, 18:35 PM
                  • Reply to tax rate question
                    emwithme
                    You will pay 18% on some (the amount that takes you to the higher rate threshold, so the first £32,000 of taxed income - the amount that's taxed if it's income at 20%) and then 28% on the rest.

                    For example, if your total earned income is £40,000 and your capital gain (after allowances)...
                    20-07-2017, 20:36 PM
                  • VAT paid on Apartment block maintenance
                    lampshade
                    Hi All.
                    Hope someone can shed light on the following. I own a lease in a purpose built block of flats (30 in 3 linked blocks, with 3 separate entrances).
                    We all pay our service charges as requested the freeholders appointed service/managing agent.
                    The question I...
                    20-07-2017, 08:37 AM
                  • Reply to VAT paid on Apartment block maintenance
                    lampshade
                    thanks for taking time to post. Maybe I have not explained what I am meaning. I am not talking about paying cash to avoid VAT, that is illegal.

                    But if VAT is paid on a bill by our service agents, (say £10,000 + £2,000VAT) and because that service agent is VAT registered, I assume they...
                    20-07-2017, 19:56 PM
                  • Reply to VAT paid on Apartment block maintenance
                    Gordon999
                    The service charge account pays the bills + VAT from each separate supplier.

                    The managing agent may charge their annual fee + 20 % VAT. ( turnover is over £80K p.a )

                    The electric company charges cost ( for units consumed on domestic property ) + 5% VAT.

                    The...
                    20-07-2017, 15:21 PM
                  • Reply to VAT paid on Apartment block maintenance
                    jpkeates
                    If the agent can claim back the VAT, they'll have to charge the same VAT to the tenants, so there's no VAT to "return".
                    VAT is always (ultimateky) paid by an end user who isn't VAT registered.
                    20-07-2017, 14:41 PM
                  • Reply to VAT paid on Apartment block maintenance
                    JK0
                    AFAIK, there is no scope for getting VAT off for cash when you are talking about service charge.
                    20-07-2017, 14:33 PM
                  • Second Home SDLT
                    xavaar
                    I just want some clarification on a scenario.

                    Say I lived abroad and had a buy to let property in England.

                    I want to move back to England and so buy a second property for £500,000 which will become my main residence.

                    Do you think it would be cheaper to:
                    ...
                    19-07-2017, 16:01 PM
                  • Reply to Second Home SDLT
                    tatemono
                    and that "own" is anywhere in the world, just in case you have property overseas also.

                    I think you may be confusing SDLT on purchase with the CGT that would be due if you sold a house that wasn't classed as your main residence. As jpkeates pointed out, SDLT is calculated diff...
                    20-07-2017, 09:15 AM
                  • Reply to Second Home SDLT
                    jpkeates
                    It doesn't work like that - you pay the additional 3% on any property above the first that you own.
                    There's a transitional allowance, to help people who sold their home and haven't bought a new one who might otherwise have been caught out., but it wouldn't apply in your scenario.
                    19-07-2017, 18:42 PM
                  Working...
                  X