Undeclared Rental Income for 2 years

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    Undeclared Rental Income for 2 years

    Ok i hold up my hands high and admit not declaring my rental income for past 2 years due to bad advice/uncertainty and I have no excuses.

    Back in Dec 2012, I bought a 1 bed flat originally to live in but due to my father's health i had to move in with him instead.
    I then decided to rent out the flat through a letting agent and had tenants move in on Feb 2014 with a rental income after fees of around £840 a month. The mortgage, service charges and others come to around £600 a month.

    I stupidly did not declare this as I was planning to move back in 6 months but I ended up renting it out for the next 2 years due to circumstances not changing.
    I now feel guilty and need to declare as it does not look like I will be moving back in the near future.

    My question is, if i complete the the SAF and state the start date of February 2013, will there be any penalties for late returns etc?
    Can I fill one form for the whole period or 2 forms for 2 tax years?

    I know I have no excuse and is willing to pay any fines but I just don;t hope it will not be hundreds of pounds.

    Many Thanks

    #2
    Get yourself an accountant, and be completely honest with him. I doubt there will be a lot of fines at all, as your 2013/14 return was only due in a week ago.

    Comment


      #3
      Originally posted by JK0 View Post
      Get yourself an accountant, and be completely honest with him. I doubt there will be a lot of fines at all, as your 2013/14 return was only due in a week ago.
      Is an accountant really necessary? Its only been 2 years

      Comment


        #4
        Everything else OK? Permission to let from lender, landlord insurance, gas safety certificate?? Any local HMO licensing?? Deposit protected within 30 days of payment & PI served??

        Hey, I had the (equivalent of..) bailiffs round when I'd not done a return for 5 years.. But they've tightened up since....

        https://www.gov.uk/let-property-campaign
        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


          #5
          Originally posted by Benstar View Post
          Is an accountant really necessary? Its only been 2 years
          The reason I suggest that is that an accountant has a 'foot in both camps'. He will be able to calculate any expenses to HMRC's satisfaction, and negotiate regarding any fines. His bill is tax deductible. Mine saves me more than his bill.

          Comment


            #6
            Is the start date February 2013 or 2014?

            Comment


              #7
              February 2013

              Comment


                #8
                Fair enough. Thanks.
                Do you recommend any online accountants?

                Comment


                  #9
                  Get a local accountant.
                  Most will give you a free appointment to discuss your situation.
                  And they're quiet right now.

                  You want someone who you like, makes you feel confident and who you understand.
                  Someone with an office with a few staff but not too many.

                  Online is not how to do this.
                  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


                    #10
                    Originally posted by JK0 View Post
                    Get yourself an accountant, and be completely honest with him. I doubt there will be a lot of fines at all, as your 2013/14 return was only due in a week ago.
                    as the link says,
                    "If you don’t make a voluntary disclosure now ( end Jan 2015 ) and HMRC finds out later, you could get higher penalties and face criminal prosecution."

                    The end date for HMRC ended Jan 2015, so be carefull if you put in a tax return, you could be ( make that - Will be ) prosecuted !

                    Comment


                      #11
                      In addition to making a full disclosure to HMRC , can I enquire if you obtained permission to let by your lender , if not do so as you would be in breach of your mortgage terms and given that the rental has been for over 2 years I suspect that unless they are themselves involved in lending in the BtL sector they could give you notice to repay their loan. Furthermore have you checked the Terms of your lease , not all Freeholders permit the units to be let , unlikely if it is a modern flat but worth checking as on a worse case scenario you would be adjudged as breaking the terms of the lease and they in turn could try and get an order for possession ahead of the lender rendering the lender with a debt with no security against it.

                      Your original intentions may be to your credit but the matter should have been discussed with the professionals.

                      Comment


                        #12
                        Since your rental business started in Feb 2013, its not worthwhile to submit a tax return for just 6 weeks to 5th April 2013. I suggest that you prepare to submit one tax return for rental profit for 2013-2014 (rental income and expenses for 13-14 months period ).

                        The current 2014-2015 tax year period has not yet ended and no tax return is due yet. So basically you are late submitting one return and may be fined 100 pounds ???

                        So prepare a draft account for your 14 months gross rental income and allowable rental expenses to year ending 5 April 2014. The allowable expenses include letting agent charges, mortgage loan interest ( excluding capital repayment ) service charge, ground rent, gas certificate, repairs .

                        You can download tax return 2013-2014 Form SA105 and SA105 Notes from HMRC website for better understanding of the return normally used for property income.( But you need to contact the local tax office for what form they want you to use ).

                        Comment


                          #13
                          Thanks for all the advice.
                          I asked a local accountant today and I was quoted £250 per year. How many times do I need to do a SAF during 2015?

                          Comment


                            #14
                            Ah, I get it. You're asking us to 2nd guess Gordon999.

                            You have my reply, and fortunately acted on it. £250 per year sounds reasonable. Mine is £1100 per year.

                            Comment


                              #15
                              I agree with JKO and think the 250 pds per year is a reasonable charge . Some online accounting firms are asking 150 for preparing a tax return for just 1 BTL property. The accountant's charge is a deductable expense against your rental income so the real cost to you is 200 pds if you are a 20% income tax payer .

                              Comment

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