Undeclared Rental Income ???

[williss]

Hi
This income dates back approximately 15 years and I've have decided to voluntarily disclose this to HMRC.
I realise that the tax will have to be paid back but I'm concerned about the 100% fine.
If I employ an accountant how likely is that he will be able to lessen this fine?, all of my cards will be on the table.
I have read on the HMRC website that there are varying percentages levied for various reasons.
Does anybody know how far they can go back as I only have 6 years worth of statements?
I have accurate figures for then past 10 years, tenancy agreements etc, but the previous 5 years I have to estimate via using percentages etc.
Any help appreciated.

[AvocadoK]

Hi,
If the disclosure is completely out of the blue as far as the Revenue are concerned, and you fully co-operate with the Revenue, then I would expect penalties to be no more than 20 - 25%. This is on the basis that the non disclosure can be attributable to neglect rather than wilful behaviour. There will also be interest - this will end up to be a much bigger figure than the penalties. (I am interested to know what others think re level of penalties!)

They can certainly go back 15 years. One of the benefits of using an accountant will be to get advice on strategy over how to make the disclosure.

AK

[mullet]

(I am interested to know what others think re level of penalties!)

Disclosure - he walks in off the street and makes a full and voluntary disclosure with no fear of discovery through any compliance activity. Abate by max 30% (includes the extra 10%).

Co-operation - if he produces all records, provides honest and prompt answers, attends a meeting if requested, makes an early and substantial payment on account and deals with all correspondence swiftly. Abate by max 40%.

Seriousness - difficult to say for sure. Worst case scenario is that several years are involved, that there was a deliberate failure to notify or submission of incorrect returns and that the amounts are high in absolute and relative terms. Max is 40%, but abate by 20%.

So net penalty might be as low as 10% - but a lot of that is down to a full disclosure and total co-operation.

[williss]

Many thanks for the replies guys, it is appreciated !.
I'll be back with an update !

[wamstax]

Forget the extra 10% for disclosure abatement (making it 30% as against 20%) as there is a strong likelihood of our questioner being picked up with the current projects being undertaken by HMRC.

However yes 10% is possible with a full disclosure and full cooperation and "some very good reasons for the failure to declare". Otherwise probably thinking about 15%-20%

[mullet]

I've have decided to voluntarily disclose this to HMRC.

If this can be proved to the Inspector's satisfaction - i.e. that it is voluntary and without fear of discovery by HMRC, then the additional 10% for disclosure will indeed be available. Despite current projects, HMRC's coverage of SA taxpayers is still very thin.

[wamstax]

If the property has been rented to housing benefit tenants then HMRC have the information regarding rents received for back years and will eventually get round to all worthy cases. Early discovery in such circumstances is likely.

I accept however that if say for example the property was let out to non-housing benefit cases then early discovery might not be unlikely on the basis that it had been going for 15 years and not discovered as yet

[wamstax]

sorry read "likely" for "unlikely" in last posting

[wamstax]

MSP wrote
Disclosure - he walks in off the street and makes a full and voluntary disclosure with no fear of discovery through any compliance activity. Abate by max 30% (includes the extra 10%).

Any compliance activity is very topical at present and numerous individuals have had to respond to HMRC's latest forays into the letting market over the last 2 years or so and they are still issuing letters all the time on this project

[williss]

Tow letters have now been sent to HMRC re voluntary disclosure and not a bean back !!!
Have they got staffing problems does anybody know?
Ta