Underclaimed Property Expenses

Underclaimed Property Expenses

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Dear Members of Accountingweb,

Hope you are doing well this evening. 

I've acted for this client with 1 Rental Property for 3 years now whom I do self assessment for, usually he gives me a figure for each expense incurred and sends me the bank statement so I can double check rents received and expenses have gone out. He used to live at the property before moving to another city for work. He is responsible for paying council tax for the property as agreed with the tenants, turns out hes been claiming 25% single persons discount with the council previously, which was fine but forgot to update them when he moved out and had more than 1 tenant move in and its just been on direct debit with online bills, making him ineligible for the discount... He's called up the council and they've rebilled him 2 weeks ago for the last 3 years with an extra council tax bill of about 300 each year. 

The returns for which these bills relate to are submitted already and 2 are out of time for amendment. The client is happy to not pursue the extra £180 in relief in total (20% tax payer), but wants to explore if its nessecary to get it changed, I believe that HMRC does have information on council tax bills, and the new bills will not matching his old returns, not sure if this is gonna raise any issues

Though im not sure if they care that expense has been underclaimed. Just wanted to know what you guys think before I get back to him. Will use accurate bills from this year onwards of course.

Thanks!!

Replies (11)

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By Paul Crowley
23rd May 2024 19:39

Amend last year. Assumed ye 2023, But if 2024 has been submitted, amend both.
Send in paper versions to as a claim to overpayment for earlier years.
But only if client wants to.
Keep a record of the advice, should he forget the advice you gave him.
HMRC will not be interested if he chooses to do nothing.

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Replying to Paul Crowley:
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By RickTaylor
23rd May 2024 21:43

Ah Okay, I will ask to see if he wants to amend 23. Haven't sent 24 yet. But I don't think he will bother, just wants reassurance HMRC gonna make a fuss if he does nothing, I didn't think they would. Thank you for your time!

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By 356B
23rd May 2024 19:41

It's a legit expense, so just include it in this year's return and don't bother with prior year adjustments.

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Replying to 356B:
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By Paul Crowley
23rd May 2024 19:45

Yes, of course.
Provided that the cash basis is being used.

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Replying to Paul Crowley:
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By bettybobbymeggie
23rd May 2024 20:17

I'd keep it simple and put it through this year too, for what it's worth, especially given we're talking £300.

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Replying to bettybobbymeggie:
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By Paul Crowley
23rd May 2024 20:23

£300 per year

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Replying to Paul Crowley:
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By bettybobbymeggie
23rd May 2024 20:38

Personally, I wouldn't amend a tax return over a £300 adjustment. Not sure I'd do it for £3,000 to be honest unless there was a particular reason for doing it eg. the adjustment had the effect of pushing the client into a different tax threshold.

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DougScott
By Dougscott
23rd May 2024 22:56

Just put the whole of the additional payment in this year. It's a legitimate expense, what's the problem?

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Replying to Dougscott:
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By RickTaylor
23rd May 2024 23:18

All done with accrual accounting, not cash basis unfortunately

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Replying to RickTaylor:
DougScott
By Dougscott
24th May 2024 08:31

what does that matter? An accrual is just a guess, you can't account for every eventuality and extra costs for past periods sometimes occur. It's not like you are talking a material amount of money or tax. If you haven't yet filed last years accounts accrue in there what is due for the previous two years but I wouldn't amend anything already filed.

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By David Ex
24th May 2024 00:04

RickTaylor wrote:

I believe that HMRC does have information on council tax bills….

I don’t and even if they did the chances of them matching a council tax bill to a SA return expense deduction is zero.

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