Inspector is not allowing the expenses on rental income

[masud10@hotmail.com]

I let a small property and claim the relevant expenses. I have lost property insurance, £89.00, invoice after my insurance brokers moved and there is no invoice for £478 spent on roof and general gutters repairs, job done by cowboy roofers on cash, which Inspector is not allowing. Is there anyway I may convince him. HELP

[accountant@uktaxshop]

Hmm interesting one. I guess the trouble is that the inspector is getting excited because you have 2 large invoices missing, and it looks a bit dodgy from their point of view.

Regarding the insurance, if you paid by credit or debit card, include the statement as your invoice proof. This should be sufficient for all but the most anally retentive inspector. And you can quote me on that one - its a normal business expense after all - and you are allowed to lose the odd invoice.

Regarding the "cowboy" roofers, this could be a bit more tricky. As you have no invoice the onus is on you to prove it. If you took the cash out of the bank you could use that as evidence, although it would be far from conclusive. Assuming the builders wonÂ’t give you a receipt (if you can find them) you might be pushed.

I do look after clients with IR investigations if you would like some professional help, I could do a fixed fee phone call to them on your behalf. It may or may not help - i do have one of two tricks up my sleeve if you are interested in giving it a go. A call to me would still be treated as your free consultation.

Regards

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436

[Ian McTernan CTA]

One of my specialities is dealing with investigations and I have been dealing with such cases for 15 years. Recently the Revenue have become much more picky with regards to expenses like these (it can't be cost effective!).

I am wondering whether this is the only area on your Return they have raised queries on, and if so it seems quite odd that such small amounts were queried unless you were unlucky and got picked 'at random'...

Ask the insurance company (not the broker)for a copy, unless you have lost the policy, changed insurers every year, or can't remember what they are called. Your mortgage company (if there is a mortgage) may also have been notified of the insurers name as it is a condition of most buy to let mortgages that buildings insurance is in place, and sometimes they do actaully check.

Failing that, ask the Inspector's boss to review the file regarding this as this just means completely unreasonable to me!

On the building work, tell the Inspector that the work was definitely done and invite him to allow the claim for the works or come down and view the property if he still refuses the claim, as the evidence of the work will be plain to see for anyone who has experience of such things. Alternatively, ask a friendly builder to have a quick look and get a letter from him stating in his professional opinion that works to the value of £478 has been performed. And if the Inspector still doesn't agree, get his boss to review the case and request that the investigation is closed down. Finally, if none of this works, ask the Inspector to list the case before the Commissioners as they are clearly wasting everyone's time and ask for costs to be awarded against the Revenue.

Ian McTernan CTA
McTernan Associates Ltd
ian@imcternan.com

[John Day]

A word of caution regarding the "cowboy builder's" charge paid "in cash". The main reason (usually) that parties enter into this type of arrangement is to save costs i.e. if the builder doesn't pay tax on the "cash" then the cost of the work to the customer is reduced - a sort of quid pro quo. The Inland Revenue MAY be looking at this on the basis that there was a conspiracy to defraud them - a criminal offence!