I have been approached by an individual to deal with unreported rental income. I have not previously acted for this person.
A property has been owned and rented for around 10 years. From preliminary discussions, it looks likely that some years will show a profit and some a loss. The individual is an employee and has never filed a tax return.
Is it going to be necessary to file tax returns for each year or is there any short cut? Will HMRC only look at 6 years? Does any reader with experience of this situation have any practical solutions, expecially regarding penalties.
Thanks.
Replies (4)
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HMRC will look for a settlement
but I would just provide accounts for the whole period the letting income has been omitted. Bring forward any losses against subsequent profits as normal. HMRC will have the PAYE records to determine correct rates of tax, but make sure you report any bank interest credited or any non-employment sources of income. HMRC have not asked for formal tax returns in the similar cases I have dealt with recently.
Settlement
I agree with Jon. We have done a few and simply submit the rental accounts and negotiate settlement. Very few offices have insisted on completion of actual Returns.
Raj
-- RighTAX
Shame you missed the Plumbers tax Plan
You could have used the Plumbers Tax Plan with HMRC if client had registered intention. This structured disclosure method has a specific penalty rate of 10% or 20%.
Peter Crowther