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Clearance procedure

Is there an advance clearance procedure for getting HMRC agreement that Rent-a-room relief is available in a given set of (borderline) circumstances?  Obviously would not be obtainable in time for 31 Jan deadline for 2011-12, but I mean generally.

An alternative would be to claim the relief and white space yourself into oblivion.  But would you have to repeat that process every year?  I appreciate that the circumstances might change from one year to the next (much as they might do when a PAYE dispensation is granted) and a clearance might have to be reviewed and re-confirmed.  I just wanted to try to get out of the hassle of annual white spacing when there are no relevant changes of circumstance.

Another alternative would be to white space yourself to kingdom come in year one and then, if no enquiry is raised into that return, AND if there are no changes in circumstances, then to assume implicit clearance.  The likelihood of an enquiry in a later year would probably be reduced by adopting this policy, but that would have to be weighed up against the penalty regime and opportunity for back duty assessments.  It occurs to me however that you might have a defence against an accusation of "carelessness" if you have gone through the hoops in year one (alone).  In that case, even if there is as adjustment the penalty would be at 0%.  Doesn't get you out of the back duty assessments, mind, so on balance a more dangerous policy, perhaps.

With kind regards

Clint Westwood

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No clearance procedure...

There is no clearance procedure - and for a good reason as you state the claim can change year on year... see text from my recent property tax book as below...

The rules of the ‘Rent A Room' relief scheme enable the landlord to prepare the usual income and expenditure accounts and then compare the actual expenses incurred with the 'Rent a room'  relief . He can then claim whichever is more beneficial.

The comparison can be made year on year and changed to cater for whichever gives the better result.

A landlord has up to one year after 31 January following the end of the tax year to decide which option to use.

http://www.taxinsider.co.uk/property_tax_secrets-book.html 

 

 

 

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what boredrline circumstances do you mean

those outlined above?  or something else?

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Thanks

In case it makes any difference, the borderline issue in this case is whether there has been a "temporary division" of the residence having regard to the tests set out in 8 bullet points in PIM4004.

Incidentally, I should be interested if those in the know can advise whether the tests are identical or similar to those under which local councils may assess separate properties to Council Tax.

With kind regards

Clint Westwood

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thanks for the clarification
I will check before i beaver

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ive had another look at 4004

you are presumably concerned whether the property division is temporary or not. i have just such a situation and i have decided its temporary, if not and it has to be a big not as it were,you could also run into CGT problems. we have no separate entrance and no council tax separation and thats pretty conclusive for me

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