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Informing HMRC of backdated rental income

It feels good posting on this lovely new site!

I asked a question a few days ago about whether I should inform HMRC about a client's rental income dating back to 2007.

I think we've come to the conclusion we should - so what's the next move - do we call or write to them... who do we speak to?

I would appreciate any help at all!

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By occca
02nd Aug 2011 22:26

Tax returns?

Has the client already prepared tax returns for those years?

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02nd Aug 2011 22:29

No tax returns prepared!

Hi occca, thanks for your reply - no is the answer, we've not even informed HMRC yet so he's never filled in a tax return - so I guess we need to get him 'in the system' somehow!

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By occca
02nd Aug 2011 22:33

My approach would be....

Get the client registered with HMRC so that they have a UTR

Get your 64-8 submitted

Write to HMRC and advise them of what has happened and that you are now in the process of completing the missing returns

You will need to complete a full tax return for each year the client had rental income

Once they are submitted and HMRC have received them and issues penalties, etc then you can start negotiating the fines and interest charges

 

 

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02nd Aug 2011 22:35

So should I send a letter instead of a CWF1?

I guess I need to write to HMRC to register him then as I can't really submit a CWF1 as he's not started working for himself, and could send the 64-8 with that.

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By occca
02nd Aug 2011 22:37

SA1 form

http://www.hmrc.gov.uk/sa/forms/sa1.pdf

With covering letter and 64-8 I would say

 

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02nd Aug 2011 22:38

Brilliant

Many thanks occca, really appreciate it.

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02nd Aug 2011 23:18

backdated rental profits

You could of course avoid the need to complete tax returns for 2009 and earlier by providing details of the net rental profit for each year in a letter (assuming of course that there were profits after deducting all allowable expenses) and enclosing your client's cheque for the unpaid tax that you have calculated from your schedules of rental profits. Remember and remind your client that he also needs to disclose any other sources and amounts of income that may have led to a loss of tax in your letter for the earlier years - no point in only making a partial disclosure as for example HMRC know about ALL interest credited to everybody's bank etc accounts for each year since 2004-05

 

hope that this helps

[email protected]

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03rd Aug 2011 07:04

Many thanks Bill...

I appreciate the reply.

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By ACDWebb
03rd Aug 2011 14:04

In the past, and possibly still

a payment on account of at least the tax, submitted with the returns, ought to help with negotiations on penalties and will stop interest, rather than wait for HMRC to process the returns.

It shows acknowledgement of the failure in the past and an attempt to get this up to date ASAP

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