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Where Taxpayers and Advisers Meet

Rental property investigation

Largechris
Posts: 3
Joined: Thu Apr 30, 2015 3:43 pm

Rental property investigation

Postby Largechris » Thu Apr 30, 2015 3:51 pm

Hello, new on this forum, so as you can guess it's bad news...

I have received an HM revenue letter, not titled but starts off with 'I have information to suggest that you may be in receipt of some income that you should be declaring to this department" etc.

The letter asks for a reply, I'm guessing they have found out about my one bed rental property, so they want some details on that.

My question is - I'm aware of the landlord tax disclosure scheme and was going to get round to doing that anyway. I'm thinking to submit my property details to this scheme first (eg now) then reply to the HM revenue letter a week later?

The idea being to maximise my chances of favourable terms? Is this a good idea? Many thanks, Chris

bd6759
Posts: 3072
Joined: Sat Feb 01, 2014 3:26 pm

Re: Rental property investigation

Postby bd6759 » Thu Apr 30, 2015 10:24 pm

Yes.
Do it now. You will be given a reference number when you contact the helpline. Write back to the letter sender saying that you have made a disclosure and tell them the reference number.

wamstax
Posts: 1863
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Rental property investigation

Postby wamstax » Fri May 01, 2015 12:59 am

Why tell a lie when you haven't in fact made a disclosure as this wouldn't bode well if you are starting out telling HMRC that a situation is something other then it is. I would suggest that you write back or phone the HMRC officer advising them that you wish to declare your income under the Letting Campaign and they will probably get you allocated a reference under which you will have 3 months in which to fully quantify and disclose your understated income. I assume that you already know that income has not been disclosed and that you have in fact made a profit.

Worked in a proper fashion there is no reason why you cannot get the benefit of a lower penalty regime and in fact start out telling the truth as it is and as you mean to continue. Deceitfulness is not the way to start off a relationship with HMRC if you have failed to do the right thing in the past. Also remember that if there are any other sources that you have understated or not told HMRC about make a full and complete disclosure from the outset.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Rental property investigation

Postby King_Maker » Fri May 01, 2015 7:52 am

You are assuming HMRC's information relates to undeclared rental income.

There are other possibilities :

1. Mistaken identity.

2. Another undisclosed source(s) - e.g. deposit accounts etc.

Have you actually made a profit from renting out the property? Quite often, especially in the early years, allowable expenditure like loan interest, repairs, insurance etc can be greater than the rent. If so, there is no legal requirement to notify HMRC of a Loss.

Have you calculated what your exact tax position is yet?

bd6759
Posts: 3072
Joined: Sat Feb 01, 2014 3:26 pm

Re: Rental property investigation

Postby bd6759 » Fri May 01, 2015 7:53 am

If you phone the Let property campaign helpline and tell them that you have tax to pay, you have "made a disclosure". There is no lying involved. Once you make the disclosure you have three months to calculate and pay the tax that is due.

Largechris
Posts: 3
Joined: Thu Apr 30, 2015 3:43 pm

Re: Rental property investigation

Postby Largechris » Fri May 01, 2015 9:30 am

Many thanks for the replies, will phone the let property scheme.

Re the first response, not sure you understood my post. I wasn't proposing to lie about anything. I'm just saying I want to make the disclosure first (now) then answer the other letter, no lying involved.

I don't know my exact tax owed position yet, there is no way I made money on the property in the early years so it is a bit of an open question.

Also yes I am only assuming the letter is about let property income, it might not be. Cheers, Chris

Largechris
Posts: 3
Joined: Thu Apr 30, 2015 3:43 pm

Re: Rental property investigation

Postby Largechris » Fri May 01, 2015 9:32 am

Sorry I meant the second response by Wamstax re lying....

jason13
Posts: 148
Joined: Mon Mar 28, 2011 2:02 pm

Re: Rental property investigation

Postby jason13 » Fri May 01, 2015 2:24 pm

I don't know my exact tax owed position yet, there is no way I made money on the property in the early years so it is a bit of an open question.
Remember that you can carry forward rental losses to future tax years.

wamstax
Posts: 1863
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Rental property investigation

Postby wamstax » Fri Sep 04, 2015 11:17 am

Hi There
Just to clarify my earlier posting you should read point 1.5 of the guidance notes on the Let property Campaign.

see About the Let Property Campaign

1.5 What’s in it for me?

Unlike previous campaigns, there is no disclosure ‘window’ requiring you to disclose what you owe by a specific date. This campaign will be ongoing for some time; however, landlords intending to come forward who delay risk higher penalties if they are subject to an enquiry and they have not already notified an intention to disclose.

at the link https://www.gov.uk/government/publicati ... disclosure

Clearly once you get the letter from HMRC you ARE already under enquiry and therefore have not come forward voluntarily.

I suppose however that "nothing ventured nothing gained" and you never know.

Perhaps if you have already done the deed and obtained the beneficial penalty rate you might want to come back to us so that we can use your result as a precedent for others. Of course if HMRC applied the "non-campaign rate" to your settlement perhaps you could also enlighten us as appropriate.
regards and hope this helps
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Operates Nationally with competitive costs
and email and phone contact can be obtained from website


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