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Where Taxpayers and Advisers Meet

DPS penalty

Tom7000
Posts:74
Joined:Wed Aug 06, 2008 3:30 pm
DPS penalty

Postby Tom7000 » Thu Jan 09, 2020 5:04 pm

A landlord paid the deposit to the DPS 3 days late. Tenant found out and appointed lawyers that came after the landlord. He settled with the tenant by paying £8k and had to pay his own lawyers £2.5k. ( Not happy as they trashed his flat when they moved out too)

When I do his rental accounts to go in his tax return are the two figures 8+2.5 above allowable expenses for tax?

I am thinking probably not but dont know for certain and at 40% tax....

cheers

Tom

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: DPS penalty

Postby maths » Thu Jan 09, 2020 6:16 pm

What is the £8k payment for? Breach of contract as between landlord and tenant? Breach of trust? Compensation for what?

Presumably not a fine by DPS?

AGoodman
Posts:1734
Joined:Fri May 16, 2014 3:47 pm

Re: DPS penalty

Postby AGoodman » Fri Jan 10, 2020 11:22 am

Maths - if the landlord doesn't pay the deposit to the scheme on time they can (and will) order him to repay the tenant x times the deposit where (I think) x is between 1 and 3. Either this was a big deposit or the authority really did not like the landlord!

pawncob
Posts:5089
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: DPS penalty

Postby pawncob » Fri Jan 10, 2020 1:26 pm

Fines imposed by statutory bodies are rarely allowable.(unless by concession)
With a pinch of salt take what I say, but don't exceed your RDA

Tom7000
Posts:74
Joined:Wed Aug 06, 2008 3:30 pm

Re: DPS penalty

Postby Tom7000 » Wed Jan 15, 2020 3:18 pm

The deposit was £5k. London Flat.
The lawyer said if it ends up in court the judge can do 3x 5k = 15.
Offer 8k because even if you win and get 1x you will have to pay £3k+ legal fees anyway...

So it was the compensation paid to the tenant under DPS rules

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: DPS penalty

Postby maths » Wed Jan 15, 2020 3:42 pm

Difficult to see how either amount could be said to be "wholly and exclusively" incurred.

Difficult to see how the monies could be said too have been incurred to preserve the capital of the property business (if so, then would be deductible).


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