Kasia1004
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Income property vs trading income

Hello everyone, my friend is self-employed and helps to rent landlord's properties (he is not an owner). He receives a fee from each landlord every month. An accountant didn't treat it as a trading income, just as property income for the last 2 years. 
He wants to stop being self-employed. Shall I amend his tax returns  and show that it was his trading income, not property income or it is ok to leave it how it is. He doesn't want HMRC may think that he is a landlord of 10 houses. 
Also he wasn't aware that he didn't pay NIC for the last 2 years (he would like to pay). Any advice please??

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18th Aug 2017 22:18

Are you saying that your friend has colluded with an accountant to evade tax, but now wants to come clean?

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By Paddy_H
18th Aug 2017 22:42

This situation is so messed up and actually does not make much sense.. Couple Of points....this is not property income but trading income, you can't decide that you don't want to be self employed as this is dependent on whether a trade is being carried on and re nic it depends on how much you are talking about. Nonetheless this accountant is completely inept by the sounds of it. Tell your friend to get a CA to sort this mess out.

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By Paddy_H
18th Aug 2017 23:00

This situation is so messed up and actually does not make much sense.. Couple Of points....this is not property income but trading income, you can't decide that you don't want to be self employed as this is dependent on whether a trade is being carried on and re nic it depends on how much you are talking about. Nonetheless this accountant is completely inept by the sounds of it. Tell your friend to get a CA to sort this mess out.

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19th Aug 2017 08:59

Well, stating the obvious, perhaps, but, if he wants to stop being self employed, he can easily achieve that by ceasing to trade. I infer that was what was meant by the badly worded OP.

It's trading income - always was - and he should have been paying NI on it. Difficult to say without seeing the figures but probably the profits won't be affected much.

For the income to be income from property, you need to own (or at least rent) the property. Builders don't have property income just because they work on buildings.

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21st Aug 2017 12:42

Self employed as what? SOmething else presumably.

The agent fees he has been receiving would surely be a separate trade on which NIC's would have been due so the shortfall is potentially 2% at best or 9% worst of the income returned as property income in the past two years. Potentially this could be dealt with by amending the last two years returns and paying the extra NIC.

Has he also bee claiming expenses, and if so what? And if he has been acting as a letting agent I suppose that there might be MLR issues to cover as well.

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to Paul D Utherone
21st Aug 2017 12:55

Paul D Utherone wrote:

Self employed as what? Something else presumably.

Self employed as a property agent.

We're all guessing as the OP is tightlipped. Maybe he's been offered a job. Maybe he wants to pretend he's an employee. We don't know. As usual, we just get some vague statement that could be interpreted in a dozen ways.

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to lionofludesch
21st Aug 2017 13:52

The OP can only tell us what their friend had told them ;)

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