I'm currently handling a self assessment inquiry for a client. The background is that HMRC opened a self assessment check into a client who I prepare company accounts for. At this stage the client disclosed to me that they had a rental property they've never informed me of. I obviously gave them a dressing down and telling off etc. Client believed that as they weren't making money on it they didn't need to declare it, I pointed out the stupidity of not telling your tax adviser about this. At that point we informed HMRC of the existence of this property and that we intended to make a disclosure and settle any liabilities if there are any.
My actual query relates to two pieces of information HMRC requested after I disclosed the existence of the rental property. They've asked for the purchase documentation and copies of the solicitor's cash account. I asked HMRC how these were relevant to determining the rental income as they were surely capital costs rather than income tax and their reply was that their request is ordinary and necessary to establish an audit trail and they are regularly given this information by taxpayers without any issues.
Would you judge these to be reasonable requests? I don't really think there's anything to hide in this documentation, it's just that I'm always reluctant to give HMRC any information that isn't entirely within the scope of the current enquiry - I can't see how these items are necessary for determining the rental income.