Hi all,
A friend of mine has been renting out a flat since 2004 and has not declared any of the income to HMRC in all that time.
She wants to come clean and pay the accumulated income tax she owes by making a non-prompted disclosure using the Let Property Campaign system.
Having read the blurb ( https://letproperty.campaign.gov.uk/ ) it seems a relatively simple process. Does anyone have any experience of using this facility? If so, what are your impressions?
I have a small BTL portfolio myself and am used to preparing tax returns so I said I will help her and have a couple of questions to ask:
The flat was rented as 'furnished' from 2004 til May 2015, when it became an unfurnished let. Can the old 10% of rental income wear & tear allowance be applied over the first decade of the letting period?
If so, can replacement relief be claimed post mid 2015 when the flat became an 'unfurnished' let?
The lady in question has documentation detailing costs regarding an eviction which was necessary in 2006. This resulted in a large loss in FY 06-07 which I intend to 'carry forward'. I imagine the 06-07 loss will not be fully covered for at least the three subsequent years. This would be allowable if using the self assessment system, will it be allowable using the Let Property Campaign?
Overall, the lady has comprehensive documentation. I.E. Every P60 bar one, almost all the letting agent's invoices, tenancy agreements and notices, and most of the mortgage provider's statements of interest paid. Even for those statements of interest paid which are missing, letters exist which make it relatively simple to generate an accurate estimate of interest paid. Given this, and her commitment to "telling, helping and giving", I imagine that she will qualify for a penalty towards the lower end of that stipulated for unprompted, deliberate but not concealed disclosures.
https://www.gov.uk/government/publications/compliance-checks-penalties-for-failure-to-notify-ccfs11
As the penalty is to be self-selected and justified, I would say 30% across all years would be correct.
All thoughts, comments, observations and suggestions are welcome,
Chris.
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