Undisclosed property rental income

Client hadn't realised it needed declaring

Didn't find your answer?

If we didn't have clients it'd be so easy......

One of my clients has obviously listened to the things we discuss every year, well THIS year she listened ... and in passing said "ah yes, we rent out a house but only get enough to pay the mortgage/bills".   How long? 5 years! (there followed a long discussion about mortgage/interest/capital/etc).  Anyway the why's are irrelevant, I just need a quick bit of help, please :)

As this is a first for me, has anyone here had any dealings with this?  I'm assuming HMRC will class this as a careless omission and therefore a 30% of tax payable penalty?  In any event one half of the couple (my client) is self employed but only low earnings (around £5-6k a year) so hopefully it'll be 30% of nothing and a lecture.  Her other half is more of an issue though - he's employed, earning c£23k.  As the profit from the rental is low (around £1k p.a. each) he falls into the "below £2,500 p.a." category.   Can anyone advise what that actually means though - on .gov it says that if the income is below £2,500 you just need to ring.  The client is in a mild state of panic - ranging from omg we're going to jail to omg we'll be fined 000's.  I'd love to be able to give them some idea of what to expect BEFORE he picks up the phone.

As I can't seem to open the files on HMRC, does anyone have a link to a functioning D01 and/or D02 form?

I've never dealt with this before and if only HMRC had a website with all the information on I could find it ..... ;)

Replies (8)

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By Tim Vane
17th Jan 2017 15:10

Nobody is going to jail.
Just google "let property campaign" and follow the guidance. Straightforward enough.

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By SteveHa
17th Jan 2017 15:20

The last LPC disclosure I did was accepted and closed off without any penalties. Took next to no time after the initial computations and information gathering, other than the obligatory postal delays.

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By sba
17th Jan 2017 15:22

Please ignore my request for D01/D02 ... I've just changed to Firefox and it all works fine (I have Windows 10 - it's a nightmare!)

Still need advice on what the employed non-client husband might be facing though :)

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Replying to sba:
By SteveHa
17th Jan 2017 15:26

I thought my reply covered that. For unprompted voluntary and non-serious disclosures they appear to be settling on just the tax (and possibly interest) without penalties.

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Replying to SteveHa:
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By sba
17th Jan 2017 15:33

Sorry yes, I was typing when you posted and didn't see your response (I live in an area where the internet is slightly quicker than a snail!).

Many thanks, I can hopefully now put their minds at rest.

:)

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By bernard michael
17th Jan 2017 16:20

Who owns the house? It's relevant in establishing who benefits from the rent

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Replying to bernard michael:
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By sba
18th Jan 2017 07:40

They're a married couple who jointly own the house and the rental profit is split 50/50

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Jennifer Adams
By Jennifer Adams
17th Jan 2017 18:45

Tell your client not to panic. Of all the dept of HMRC the Campaign one is the most approachable. The good thing is that the client is volunteering the error. But tell her that in any event they would have caught up with her if not soon (by looking at Land Registry records comparing with council tax) then when they sell (Land registry).
They will be charged interest on unpaid tax and a penalty which will be much less than the one for incorrect returns (which in reality they are).
Never offer 30% penalty - that is for people who have purposely not disclosed. You can try 10% but its normal to be charged 20%.

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