Morning all,
A new client has had rental income from 2005/06 to date but has never declared any of it to HMRC. Also has unclaimed mileage allowances from 2006/07 to date. What is the first years tax return that needs completing now? If it is pre 2008/09 can the mileage claims still be offset against the tax on the rental income?
Any assistance would be welcome, thanks in advance.
Replies (7)
Please login or register to join the discussion.
Google is your friend ....
Q: What is the first years tax return that needs completing now? A: Assuming the rental business is run with a view to profit, 2006/07 (unless no liability to tax for that year).
Not sure what the "unclaimed mileage allowances" relate to but, assuming it's not the rental business, 2008/09 is the earliest year for which a claim can be made.
On the up side should he get investigated in
those earlier years you may be able to make the mileage claim at that point (TMA1970 S43) - not tried it myself and only applicable if he gets enquired into....
Well, superficially illogical/unfair but the individual is the one who has the information so arguably at an advantage over HMRC.
I suspect in the case you quote HMRC could go back 20 years because it looks like deliberate rather than careless behaviour. On that basis, I think 2005/06 would still be in point.
given that the repyt motgage exceeds the
income (and given the usually low capital content of those early years of mortgage payments) I would be surprised if you couldn't find enough expenses to cover the income (repairs/agent fees/use of home/travel expenses/accountancy/gas certificate/maintenance/furnished wear and tear deduction etc etc).
In the early years it is likely there is a loss therefore no real case to answer (no loss of tax for the revenue) - i suspect it will be the later years when the interest rates went down (assuming he is not on a fixed) where you may have problems....
Make a voluntary full disclosure to the Revenue - make an offer (tax plus interest) and send everything in together (returns & cheque plus reason for late disclosure) - Don't be surprised if they just accept it. re the penalty level - they may look to charge something....you could make an offer in your intial letter....thats if there is a tax due......