I have done a number of disclosures recently on rental income but wonder what constitutes reasonable excuse because if reasonable excuse is selected then the disclosure only has to go back to 12/13 (the DO2 won't let you go back further).
I had 2 clients last week on this.
One hadn't disclosed because the income was from Cyprus, it was only small and the client believed that as the property was abroad she didn't need to declare the income in the UK
Other client owned a rental property jointly with his spouse and thought his wife had disclosed all the income on her tax returns for last 6 years. His wife had declared her 50% share of the income on her tax returns but not the full 50%.
In the past I have had clients say (wrongly, of course) that they thought full mortgage repayments (capital & interest) were allowable and as this then created a loss there was nothing to disclose
In both cases I advised that whilst the discloures were unprompted and not deliberate I did not believe HMRC would accept reasonable excuse so the disclosure went back to when the renting started (2010 in one case and 2009 in the other).
I didn't feel their excuses met with the criteria (although HMRC's definition of reasonable excuse doesn't, I believe, carry the force of law at present). However I wonder if I have been a bit harsh with the advice and whether I could have selected reasonable excuse and reduced the disclosure just to 2012/13 onwards ans waited for HMRCs response?
What would be the consequence of HMRC disputing reasonable excuse and would other posters maybe have gone for that option and waited to see what happens?