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    • Generali
    • By Generali 1st Mar 07, 1:55 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    • #2
    • 1st Mar 07, 1:55 PM
    • #2
    • 1st Mar 07, 1:55 PM
    I'd declare it if I were you - they should be fine about it although you may have to pay a small fine as the tax for fniancial year 2005-6 was due on 31st Jan 2007.

    The risks of continuing to hide it, if you are caught, are big penalties and (worst case) playing hunt-the-soap with Mr Big in the prison showers!
  • jaype
    • #3
    • 1st Mar 07, 2:40 PM
    • #3
    • 1st Mar 07, 2:40 PM
    Yes - don't leave it any longer or the old 'sorry gov, I didn't realise' (in your case, true) may start to sound a bit hollow. One lot of people you don't want to get on the wrong side of are the IR. If you are upfront they're really helpful.
    • Generali
    • By Generali 1st Mar 07, 2:49 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    • #4
    • 1st Mar 07, 2:49 PM
    • #4
    • 1st Mar 07, 2:49 PM
    Get yourself a tax accountant. You will be able to offset some or all of your expenses against the income, thus reducing your bill.
  • kungfumaster
    • #5
    • 1st Mar 07, 3:02 PM
    • #5
    • 1st Mar 07, 3:02 PM
    Thanks for the replies guys.

    OK, I'm going to declare it but how would I go about it? Do I phone the IR or fill in a self assesment form? Also, reading through the websites, they say that I should have all receipts for the last 6 years, whereas I have hardly kept any of my receipts . I'm looking at these contact numbers

    http://www.hmrc.gov.uk/contactus/helplines.htm

    but it's not clear which to ring. My guess would be Tax & Benefits Confidential?

    re: the accountant, would I really need one of those? I'm guessing they are going to be expensive and if I do save any because of their advice, it would go straight into their pocket, not mine.
    • Generali
    • By Generali 1st Mar 07, 3:39 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    • #6
    • 1st Mar 07, 3:39 PM
    • #6
    • 1st Mar 07, 3:39 PM
    I'd start with 0845 915 4515 (Newly Self-Employed) and take it from there.

    Accountants aren't necessarily that expensive and mine has saved me thousands over the years at a cost of a few hundred. And she's really pretty too!
  • kungfumaster
    • #7
    • 1st Mar 07, 4:01 PM
    • #7
    • 1st Mar 07, 4:01 PM
    Thanks, I'll give that number go.

    A few hundred quid in a few years and she's pretty?? What's her number?

    How much are accountants? Are they paid by the hour - like £50 an hour? or per job?
    • mystic_trev
    • By mystic_trev 1st Mar 07, 4:15 PM
    • 5,065 Posts
    • 14,994 Thanks
    mystic_trev
    • #8
    • 1st Mar 07, 4:15 PM
    • #8
    • 1st Mar 07, 4:15 PM
    I wonder how many other BTL's don't pay Tax on their Income - quite a few I should imagine. Even if the BTL isn't making a profit, they should still be filling in a Tax return. How many (the new breed of Landlord in particular) have thought about this?
    • Generali
    • By Generali 1st Mar 07, 4:20 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    • #9
    • 1st Mar 07, 4:20 PM
    • #9
    • 1st Mar 07, 4:20 PM
    It's a few hundred a year - that includes my company accounts. That's followed by dinner at Rules and a night in a hotel with my accountant.*

    I use an outfit called 1st Contact based in New Oxford Street. They're a bit of a factory but cheap and very good for the sort of accounting that I need. They charge per job but there are plenty of others that charge per hour.

    *In my dreams.
    • Generali
    • By Generali 1st Mar 07, 4:25 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    BTW, talk to your new-found accountant before the taxman. That way you know exactly what you need to say and do before you make the call.

    mystic_trev - it's a good point you make. Quite a few I suspect. I guess all those fines will help Gordon 'Bennett' Brown fill his black hole.
  • real1314
    I wonder how many other BTL's don't pay Tax on their Income - quite a few I should imagine. Even if the BTL isn't making a profit, they should still be filling in a Tax return. How many (the new breed of Landlord in particular) have thought about this?
    by mystic_trev

    Well, if they don't, they might be getting a knock on the door? I was chatting to a colleague the other day who told me her sis works at HMRC and they have teams who check newspaper ads, lettings agents etc etc for people renting houses out (amongst other things).

    There was also a report in the Mail on Sunday Financial section about some software they have that can trawl the internet to spot people trading through websites (incl ebay).

    BIG BROTHER IS WATCHING YOU.
    • Gorgeous George
    • By Gorgeous George 1st Mar 07, 5:22 PM
    • 7,787 Posts
    • 8,466 Thanks
    Gorgeous George
    Ring them or write to them. Despite the stereotypes, they are extremely friendly.

    If you only have one BTL and your accounts are simple, you should be able to deal with them yourself.



    GG
    • Generali
    • By Generali 1st Mar 07, 6:02 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    If you only have one BTL and your accounts are simple, you should be able to deal with them yourself.
    by Gorgeous George
    I'm not sure this is great advice. Admittedly, I'm not an expert but I have seen references to there being 2 ways to run a BTL - either as self-employed or via a Ltd company. The structure can have quite an impact on the amount of tax you pay I think. I reckon a bill for a few hundred quid could end up saving you a packet as well as giving you peace of mind.
  • ajaxgeezer
    I wonder how many other BTL's don't pay Tax on their Income - quite a few I should imagine. Even if the BTL isn't making a profit, they should still be filling in a Tax return. How many (the new breed of Landlord in particular) have thought about this?
    by mystic_trev
    ... Indeed Trev, I fully agree. There is a view that income under £2500 needn't be self-assessed if the landlord is on PAYE, but my attitude towards it was to register straight away. If they see you as being as honest as you can then that will smooth the ride out later. The worst thing to do would be to think that you're being clever now, only to have them trawling through everything you do at a later date. Be upfront with them and they are surprisingly helpful.
    • Gorgeous George
    • By Gorgeous George 1st Mar 07, 6:18 PM
    • 7,787 Posts
    • 8,466 Thanks
    Gorgeous George
    I'm not sure this is great advice. Admittedly, I'm not an expert but I have seen references to there being 2 ways to run a BTL - either as self-employed or via a Ltd company. The structure can have quite an impact on the amount of tax you pay I think. I reckon a bill for a few hundred quid could end up saving you a packet as well as giving you peace of mind.
    by Generali
    I'd be interested in more info.

    It may be the CGT that is impacted. If so, I'll employ a tax accountant tomorrow.



    GG
  • hungary97
    dont panic

    This happens all the time i am both ex Revenue and an tax accountant and i have lost count of the times i have had to do 6 years returns for someone that has recently had a call from the Revenue as someone has dobbed them in.

    The Revenue are pretty good as normally it is fairly small amounts with new Buy to letters and as the IR computer system is rubbish you may not even get fines for earlier years.

    I would reccomend getting an accountant for a basic set of accounts and tax return you shouldnt need to pay more than £200 and i promise they are bound to be able to reduce your bill by more than that if you do it. The advantage of using an accountant is that the know how much expenses they can estimate without drawing your return to the revnues attention for an enquiry especially important as you have not kept your reciepts.

    Two allowances you may not of thought of is use of home as office and wear and tear allowance. On an average rental income of £6000 per year claiming these would save enough tax to ofset your accountants fees.

    Personally unless your rental income is massive 20-30k a year (and depndant on other income) i would not even entertain setting up a company as admin charges would cost more than setting it up.

    hope this helps
    • Generali
    • By Generali 1st Mar 07, 6:27 PM
    • 35,754 Posts
    • 143,607 Thanks
    Generali
    i would not even entertain setting up a company as admin charges would cost more than setting it up.
    by hungary97
    I'm definitely not getting into an argument with an accountant over tax! However, setting up my Limited Company cost me about £100 or something through my accountants although it would have been more if I wanted to chose my own name for it.
  • hungary97
    im not argueing with either unfortunately recently i have had a number of clients come to me where a certain accountancy firm which has recommended that all there clients become companies and they have ended up paying more tax. If you have set up the company for £100 without your name it would have only cost the firm a small amount and they have made a big prodit in percentage terms.

    The intial setting up amount is relatively cheap it is the administration, accounts, tax returns, and tax that could work out more and gone are the days of the 0 percent band.

    as i have said it does depend on your other income and profit and also the CGT implications. I know the firm i used to work for would not consider it if profits were under 30K and complicated comparrisons needed to be done.

    For anyone thinking about it Setting up a company should not be done without the advice from an accountant.
  • Matt1069
    I wonder how many other BTL's don't pay Tax on their Income - quite a few I should imagine. Even if the BTL isn't making a profit, they should still be filling in a Tax return. How many (the new breed of Landlord in particular) have thought about this?
    by mystic_trev
    Is there an amount I'm allowed to make before i have to start paying tax, as a brand new LL (exchanged contracts with my new tenants last week) myself thats employed, I'll admit I'm not making that much profit at all per month, its pure long term investment for me, just wondered if theres an allowance per year, after maintenance that'll no doubt start soon, i prob won't be making anything, i assume I'll still have to prove/declare it but was just wondering about any allowance?

    Thanks
    • Gorgeous George
    • By Gorgeous George 1st Mar 07, 7:13 PM
    • 7,787 Posts
    • 8,466 Thanks
    Gorgeous George
    10% for wear and tear (furnished lettings only I think).
    Mileage at 40p per mile
    Stationery
    Mortgage interest (subject to certain rules)

    Must be loads more but things such as DG or other home improvements only qualify against CGT, so I believe.

    My profit in 05/06 was just over £100. This year I'll make a loss.

    Oddly, there is no tax-free amount. I say oddly because there is if you only rent a room in your main residence.



    GG
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