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Let Property Campaign - how to disclose no tax?

Client hasn't submitted returns for 9 years but has no tax to pay.

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Non-resident landlords haven't submitted self-assessment tax returns for 9 years. They own property in the UK but are not resident (nor domiciled) here. If they had submitted the returns they wouldn't have paid any tax due to personal allowances. 

Do they still need to make a disclosure under the Let Property Campaign even though there is no tax to pay? Or is there some other way to tell HMRC? I have prepared the 2020 returns. 

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By Paul Crowley
14th Jan 2021 14:11

Assume there is no UK agent?
If so, agent would have been deducting tax

If no agent, Rent payer should have been deducting tax

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Replying to Paul Crowley:
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By exceljockey
14th Jan 2021 14:36

Paul Crowley wrote:

Assume there is no UK agent?
If so, agent would have been deducting tax

If no agent, Rent payer should have been deducting tax

They were given exemptions from HMRC not to have tax deducted. Reading the regulations though, failure to submit returns could result in losing this exemption. So I assume they will have the tax deducted by the agent going forward.

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Replying to exceljockey:
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By Paul Crowley
14th Jan 2021 15:30

So failed to do what they promised to do
Amazed it took so long for HMRC to catch up with them

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Replying to Paul Crowley:
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By Wanderer
14th Jan 2021 16:03

No promise to make future SA returns is made in the NRL application.

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By Wanderer
14th Jan 2021 14:19

LPC is only for those that owe tax.

Be careful with your logic though. Got it in mind that there was a technical discussion on here some time ago which argued that non-res individuals had to actually claim PAs and could be out of time.

If there would be no liabilty can you justify an argument to let sleeping dogs lie?

Only other thing that comes to mind is a simple letter notifying HMRC of income but pointing out no tax laibilty.

What has prompted the 2020 returns?

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Replying to Wanderer:
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By exceljockey
14th Jan 2021 14:33

Wanderer wrote:

What has prompted the 2020 returns?

They were chatting to someone else who has properties in the UK who said they were submitting returns. It then prompted them to enquire as to whether they should be.

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Replying to exceljockey:
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By Wanderer
14th Jan 2021 15:59

Okay when they 'enquired' who said they HAVE to complete returns? Hopefully it wasn't you as the approval letters say:-

Although rental income will be paid with no tax deducted, it is still liable to tax and your client must include it on any UK Tax Return he is ASKED (my emphasis) to complete.

If your clent does not receive a Tax Return AND (my emphasis) you think they may be liable to UK tax, pelase tell us.

Nothing in the approval letters makes it compulsory to complete a SA return.

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Replying to Wanderer:
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By exceljockey
14th Jan 2021 18:18

Wanderer wrote:

Okay when they 'enquired' who said they HAVE to complete returns? Hopefully it wasn't you as the approval letters say:-

Although rental income will be paid with no tax deducted, it is still liable to tax and your client must include it on any UK Tax Return he is ASKED (my emphasis) to complete.

If your clent does not receive a Tax Return AND (my emphasis) you think they may be liable to UK tax, pelase tell us.

Nothing in the approval letters makes it compulsory to complete a SA return.

They haven't been asked to complete a tax return by HMRC and they have no tax to pay if they are entitled to a personal allowance (which I am certain they are.)

It was the guy down at the pub (or most likely at the driving range) that told them they needed to fill out a return.

For reference sake, there are two properties with a combined income (after costs) of ~£10k per annum split between the two of them. These properties are not on Park Lane.

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Replying to exceljockey:
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By Wanderer
14th Jan 2021 18:40

Okay, so why have you prepared 2020 returns?

exceljockey wrote:

I have prepared the 2020 returns. 

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By ireallyshouldknowthisbut
14th Jan 2021 14:28

I would add a note to the white space

its never read, so avoids triggering any actions HMRC's end (like issuing 9 tax returns) but gives you some protection against a discovery.

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By SteveHa
14th Jan 2021 16:22

Subject to Wanderer's observation tha NR individuals may have to claim PA (I haven't checked for myself), doesn't S7 TMA kick in to mean that there is no requirement to notify in the first place.

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Replying to SteveHa:
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By Wanderer
14th Jan 2021 16:29

I think that the discussion has moved on as the OP has since confirmed that disclosure of existence of income has, in fact, been made to HMRC as the taxpayers have been given approval for no deduction under NRL scheme.

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By richard thomas
15th Jan 2021 16:23

Wanderer is right that a non-resident has to claim a personal allowance but wrong to imply that a resident does not have to - see s 35 ITA 2007.

Since the only condition is being alive in the tax year HMRC take it on trust that someone who makes a return is alive for some part of the tax year.

There is also an interesting question about how someone in PAYE not in SA makes the claim. They could use Schedule 1A TMA, but of course don’t.

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Replying to richard thomas:
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By Wanderer
15th Jan 2021 16:39

Thanks for the clarification Richard, it's obvious when you read the Act!

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