NRL Scheme-As a tenant should I be witholding tax to pay to CNR/IR-or am I deluded?!

N79

In reply to Franklee's post and as a continuation of my previous post.

I just want to make clear that I would stongly recommend that T's simply report their concerns about potential non resident LL's to HMRC. Determining residency is very difficult even for the person invovled. To try to do it from the scant information a T has is sheer lunacy. Getting involved in second guessing the status of LL's will lead to many mistakes.

Make no mistake that if you withhold rent with just cause you will get evicted. There is no provision in the housing acts to allow you to defend eviction proceedings on the grounds of "I made a mistake about my LL's tax status" or "HMRC told me to do this".

Tax residency is not as simple as where you live. Many people who appear to live in the UK somehow manage to claim various forms of UK tax exemption. Likewise, just moving overseas is not necessarily sufficient to become non resident.

franklee

N79 wrote: »

In reply to Franklee's post and as a continuation of my previous post.

I just want to make clear that I would stongly recommend that T's simply report their concerns about potential non resident LL's to HMRC. Determining residency is very difficult even for the person invovled. To try to do it from the scant information a T has is sheer lunacy. Getting involved in second guessing the status of LL's will lead to many mistakes.

Make no mistake that if you withhold rent with just cause you will get evicted. There is no provision in the housing acts to allow you to defend eviction proceedings on the grounds of "I made a mistake about my LL's tax status" or "HMRC told me to do this".

Tax residency is not as simple as where you live. Many people who appear to live in the UK somehow manage to claim various forms of UK tax exemption. Likewise, just moving overseas is not necessarily sufficient to become non resident.

I haven't said tenants should attempt to determine a landlord's residency - clearly they should not. A tenant is just interested in if they should collect the tax or not and in protecting themselves from any tax liabilities. I've said I think a tenant should get advice from CNR just giving CNR the facts as they are known. CNR is the relevant bit of HMRC and it is they to determine what the tenant should do. I can't see why you got a different impression from:

franklee wrote: »

I think it's clear a tenant who has any concerns about a landlord who may be living abroad should ring up CNR for advice, give CNR the facts as far as the tenant knows them and then follow CNR's advice. If the landlord does not agree with CNR's decision then surely he or she should take the matter up with CNR, remembering the decision of what to do was CNR's and not the tenant's. CNR can then issue any new instructions to the tenant.

But to be clear, IMO I think tenants should read IR140 Non-resident landlords, their agents and tenants and then if unsure ring CNR and take their advice. If the tenant is paying rent to the landlord's agent in the UK then the tenant can relax and the agent needs to take the above steps instead if they are unsure of whether to collect the tax or not.

What a tenant should not do is just hope it all goes away as that may leave them liable for collection of backdated tax that they cannot easily get back if the tenancy comes to and end or has already ended.

franklee

tbs624 wrote: »

FrankLee- there are several threads in which the issue has been discussed and/or relevant links provided including posts from Clutton, N79, Notlob, me, SevenDayWeekend, Rosysparkle, Captain Mainwaring et al . You perhaps missed them as they tended to be in threads from LLs/potential LLs querying their responsibilities when letting out/moving abroad.

Examples:
http://forums.moneysavingexpert.com/showpost.html?p=3335878&postcount=4
http://forums.moneysavingexpert.com/showpost.html?p=3247145&postcount=24
http://forums.moneysavingexpert.com/showpost.html?p=18842147&postcount=6
http://forums.moneysavingexpert.com/showthread.html?p=15791265&highlight=non+resident+landlord#post15791265
http://forums.moneysavingexpert.com/showpost.html?p=5701416&postcount=6
http://forums.moneysavingexpert.com/showpost.html?p=7988005&postcount=11
http://forums.moneysavingexpert.com/showpost.html?p=2950011&postcount=10
http://forums.moneysavingexpert.com/showpost.html?p=14108357&postcount=10

Thanks for those very useful links.

They are all but one thread written from the landlord's point of view, e.g. talking about how to stop tax being deducted at source - which is a good way to prevent hassle for everyone. Of course this all fine and correct but as the threads aren't aimed at the tenant it's not clear from those links, other than the odd passing mention in long posts about the landlord's affairs, that the collection of tax is the tenant's responsibility (and liability for backdated tax for the tenancy) when there isn't an agent and the landlord isn't registered for exemption.

The one thread in your list from a tenant's point of view,

http://forums.moneysavingexpert.com/showthread.html?p=15791265&highlight=non+resident+landlord#post15791265

isn't comprehensive with only N79's touching on it in this bit "HMRC require LA or if no LA tenants to pay the tax portion of rent for overseas LL to themselves rather than to the LL unless the LL has applied and recieved permission to receive rental income gross. In reality this is aimed at LA who now have to act as unpaid tax collectors for HMRC (like companies with PAYE). In theory, Ts should also do this." (It isn't just in theory BTW, the tenant is as liable if there is no agent, the scheme is aimed at T's too).

I guess the natural instinct of a tenant is to ignore the landlord's personal circumstances and thus would not read all those threads in detail, it would not have occurred to me to read other than the one of them I linked again above if I'd been a tenant with a potentially non-resident landlord. Actually I probably would not have researched any of it at all as it would not have occurred to me that a tenant could ever be required to be a tax collector and liable upfront for someone else's tax. As it is I knew about this from reading forums etc. in general, I first saw it on landlordzone IIRC. I hadn't till now considered the problems a tenant would face if the landlord wasn't upfront about where they were living. Perhaps we could do with a mention in the tenant's guide to renting sticky thread.

kissingthepink

broclo wrote: »

I only found out about the scheme last night. Rent is now due also.

LL's bro called today and I informed him, he threw hissy fit, said I would not further speak to him regarding the matter by telephone as he was not 'communicating', but ranting. He said that I would :rolleyes:

So winged him the email quickly as he has a habit of constant telephone calls/texts.

I spoke to CNR between the call and the email.

LL Bro has replied, saying I should not 'assume I know the answer to everything' and I should 'keep my nose out of her residence status and tax affairs'.

I sent him a quick email back basicaly saying I was not assuming anything, hence the call to the CNR and I was not sticking my nose in, just keeping to my responsibilities in regard to liabilities.

I will send a proper letter over the issue, admitedly it was very rushed, a bit blunt too, but he freaked the hell out of me on the telephone saying he was going to tell the council I am committing benefit fraud etc by witholding the LL's tax etc.

Anyway, either way, the above was sent. I will refuse communication other than letter though. But can you tell me if I am indeed correct(even if maybe not going about it the right way) in what I am doing?



They are not too happy with me as I've discovered (an email admittance today also) that they have failed to protect my deposit in a TDS, stating the reason they did not comply within 14 days was in case I had rent arrears, which of course is irrelevant.

I have yet to raise the issues that there is no EPC or Gas Safety Cert...fun, fun, fun!

You LHA tenants have FAR too much time on your hands!!!!

Acanthisups1

http://forums.moneysavingexpert.com/showpost.html?p=17974525&postcount=142


Thats not true of Broclo. She collects letters after her name. Even managing to do a 3 years Masters Degree in 6 months, despite having two sick children and no family in the area to help. :rolleyes:

No wonder she hasn't had time to check the basics, like a gas safety certificate. :rolleyes:

00ec25

Acanthisups1 wrote: »

3 years Masters Degree in 6 months, :rolleyes:

hmmmmmm, not from a reputable uni I'll bet. As I said in post 18 Looks like a typical case of an amateur LL meets a professional HB tenant

broclo

kissingthepink wrote: »

You LHA tenants have FAR too much time on your hands!!!!

No...that is why a friend took my eldest off for the day when I discovered the tax issue

Acanthisups1 wrote: »

Thats not true of Broclo. She collects letters after her name. Even managing to do a 3 years Masters Degree in 6 months, despite having two sick children and no family in the area to help. :rolleyes:

No wonder she hasn't had time to check the basics, like a gas safety certificate. :rolleyes:

Not anymore I do not, I'll have no need as the industry i'm from is not suitable hours for a lone parent of two. I never completed it due to ill health actually. I do not have two sick children, just one that has behavioural isues. I moved to be near my family.

00ec25 wrote: »

hmmmmmm, not from a reputable uni I'll bet. As I said in post 18 Looks like a typical case of an amateur LL meets a professional HB tenant

It was actually, but I decided not to complete it at this stage as having two children is more demanding than one. I will perhaps look into it again, depending on my 'carers status' in 12m and my own health.

No...a tenant who wanted to protect herself from a massive tax bill and a non compliant law breaking landlord. Very different i'll think your find.

broclo

N79 wrote: »

Tax residency is not as simple as where you live. Many people who appear to live in the UK somehow manage to claim various forms of UK tax exemption. Likewise, just moving overseas is not necessarily sufficient to become non resident.

In terms of the NRL scheme it is exceptionaly simple, 6 months out of 12 months and you are a Non-Resident Landlord. The CNR has COMPLETELY different residency rules to the rest of the HMRC and that comes not only from their publication, but also from a senior adviser at the CNR who of course are the experts on the scheme

poppysarah

*Chattie* wrote: »

The Royal Mail could learn a thing or two from the post operatives in Oz if you got a letter quite so quick!

I think I've had one obnoxiously quick - 2 days ... or might have been three. utterly suprised me anyway!

tbs624

broclo wrote: »

In terms of the NRL scheme it is exceptionaly simple, 6 months out of 12 months and you are a Non-Resident Landlord....

Perhaps not quite as "exceptionaly (sic) simple" as you imply. 6 months or under ( ie up to and including 6 months )and the LL would not be classed as having a usual place of abode that is non UK and if the 6 months+ straddles two tax years then they wouldn't be either.

Here's a direct quote from HMRC for you:

[FONT=&quot]“where letting agents and tenants have no reason to believe that a LL has a usual place of abode outside the UK they are not required to make any special enquiries. In these circumstances they do not have to operate the scheme.”[/FONT]

You could have saved yourself much expended time & energy, having had written confirmation, from both the brother and the LL herself, that her affairs were in order as far as they were concerned (Time & energy that would surely have been better spent sorting out gas safety issues, especially when you have a young family) AFIAA no-one ever died because their LL may have been trying to pull a fast one over tax: however, young children are particularly vulnerable to the effects of carbon monoxide. Worst case scenario: would your kids appreciate your role as an unpaid tax collector if you were the one who was left dead or brain damaged by carbon monoxide poisoning?

Absolutely not condoning any LL who doesn't comply with approriate regs of any sort but your priorities seem a little muddled.