I realise that you have only mentioned rental properties here but you have to be realistic and consider that if you have "unwittingly" understated your rental income on the possible basis that you hadn't actually made any profit - mistakenly treating capital repayments on loans as having to be taken into account before you made a profit - then any open minded inspector of taxes might consider that you had unwittingly understated other sources of income. If you were self employed or a company director then you could expect HMRC to be reviewing more than the simple rental matters. This would include how you were able to finance the properties and how much this left you of your declared income to meet your private & personal needs
You do need to get a professional to -in the first instance prepare rental business income and expense statements so that you can get an idea of the likely duties unpaid as a result of your mistake(s). You also need to speak to someone about the further potential problems e.g. financing your settlement of the unpaid duties , interest and mitigated penalties and accurately completing some inevitable paperwork that will be required by HMRC before they agree to settle with you.
As to penalties you can achieve quite high "discounts" from the statutory maximum of 100%.
Firstly you can get up to 20% off for going to them and making a full disclosure of your past irregularities
Then you can get up to 40% off for full "cooperation". This means that you have to be fully cooperating and quickly providing all documentation and information that HMRC need to consider your understatements and to bring matters to a conclusion
Lastly is the bit that you cannot do too much about - but a professional can put matters in the best light for you - and that is the seriousness of your mistakes.
You can basically get up to a further 40% off for what is called "seriousness" and relates to the size and gravity of your offence(s). In other words the bigger the size of the settlement - and a professional can always within the law limit the damage you are seen to have done -; the longer the period you have been "fiddling" and the more serious the nature of your offence the less you will get of a discount for this aspect. Very minor cases of neglect might get as high as 35% going down to possibly 15% in a local office case with exceptional cases dealt with by Specialist offices sometimes going below that for such as fraud.
You may have to realise assets to pay HMRC their debt too however all this would be discussed with your professional
I hope this helps and feel free to refer to my website where you might find some pointers to what you need to be considering at this time. Don't leave it as it can only get worse and if you get figures calculated then you know where you stand finacially.
see website at
regards and hope this helpshttp://www.wamstaxltd.com
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