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Historical property rental income - how far to go back?

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.


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18th Apr 2012 15:02

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.


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19th Apr 2012 16:05

Google is your friend

Thanks for this - that is exactly the answer I came up with looking at Google and the HMRC website.

However it just seemed illogical that HMRC are allowed to go back 6 years for unpaid tax but the taxpayer can only back 4 years to claim any tax back from HMRC. My client will have a liability for 2006/07 now but if he had filed at the time he would have had money due back to him.


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19th Apr 2012 16:23

if he had filed at the time
His responsibility!

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19th Apr 2012 16:49

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....

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19th Apr 2012 18:18

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.

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20th Apr 2012 08:04

Many thanks

Thanks for the responses.

A classic case of someone who makes a cash loss on rental income due to a repayment mortgage and assumes this translates to a taxable loss I am afraid. Would hope this therefore falls into careless rather than deliberate behaviour.


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20th Apr 2012 09:04

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 could make an offer in your intial letter....thats if there is a tax due......







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