Rental property not declared for tax previously

[tonyhad]

Hi
I have a property in Spain, which I bought 5 years ago (now worth less than I bought it) for use originally as a holiday home, though we are now divorced, I have rented this out commercially online but never declared it for tax purposes, hoping to recoup some of the outgoings.

The property originally cost €210,000 plus 10% fees (£155,000 at that time) now worth approx €160,000. I have since furnished the property and installed modifications such as A/C.
I received approx £2500 a year rental income over the previous 3 years since my divorce but was paying approx £800 a month in mortgage, plus another £150 a month in communal fees and utilities. I also pay approx £350 a year in cleaning and gardening fees for the rentals.
I haven't completed a tax return for any of this (I am PAYE company employed, with no other businesses).

I have recently been approached by a company offering to claim back tax for Capital Allowances of 20% for my property and am not sure what to do in this situation.
I would appreciate any advice on my situation with particular regard to any tax avoidance (though I havent actually gained anything) and what I should be looking to do next.
Thanks in anticipation
Tony

[wamstax]

Unless your property was let on a commercial basis and as a furnished holiday let that is
■be available for holiday letting on a commercial basis for at least 140 days in the tax year;
■actually be let for at least 70 days; and
■has no periods of longer-term occupations that, in total, exceed 155 days in the tax year,
The let is regarded as commercial if it is on a commercial basis with a view to realising a profit
- see link
http://www.taxationweb.co.uk/tax-articles/property-taxes/how-to-get-property-tax-reliefs-while-you-still-can.html
any losses on the property would only be carried forward to be set against any property.
From the figures provided you seem to have the following
Income £2,500 (does not seem to be enough to say commercially let sufficiently as an FHL)
Less Expenses
Comm & Utilities £1,800 (subject to any restriction for periods of personal use and not available for letting)
Mortgage INTEREST £X??? (subject to any restriction for periods of personal use and not available for letting)
Cleaning & garden £ 350 (subject to any restriction for periods of personal use and not available for letting)

So that you may have not much exposure to tax liability for any period and might not be required to complete a tax return (although you should have advised HMRC of the commencement of the letting and established any tax losses on the letting that might be available if you ever let it at a profit)
Given the air conditioning (not allowable against letting income) as a deduction and the fall in value if you sell you would only have a Capital loss that would be available for setting off against any future gains

[wamstax]

Some of the reasons for having to file a tax return are as follows :-
Income above a certain level from savings, investment or property
If you don't already complete a tax return, you'll need to do so if you receive any of the following:

•income from savings and investments of £10,000 or more
•income from untaxed savings and investments of £2,500 or more
•income from property (before deducting allowable expenses) of £10,000 or more
•income from property (after deducting allowable expenses) of £2,500 or more
•annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
•income from the estate of a deceased person on which tax is still due

and you might therefore not have fallen foul of the return reuirements.

The fuller information on filing returns is available at
http://www.hmrc.gov.uk/sa/need-tax-return.htm