Old tax return

gien

Maybe someone here will be able to help with the following.
A relative of mine has been asked to fill out a tax return for the year 2003-2004 because he sold a property he had let out.
There are no capital gains due on the sale as it was his principal primary residence for some time and then the profit did not exceed his CGT allowance.
Also, due to a terrible mortgage deal on a pretty rubbish house and agents fees etc he never actually made any money on letting the house out, which I think is why he didn't think to declare it at the time (he is not very financially competant it has to be said).

Will this mean that he has to fill in lots more tax returns for previous years or is it now out of time?
Also he paid a £100 late fine as the tax return was sent to an old address - can the revenue fine him more even though no tax will be due?
Thanks in advance for any insight.

suso

The fine is for the late filing of the return. Once the return is filed the fine will be reduced to an amount no greater that the tax outstanding at its filing date (31/01/2005)

So if no tax is due, the penalty gets reduced to zero, but if the return is not filed then further penalties will be applied and possibly a determination where HMRC will try to guess the amount of tax due.

gien

Thanks, so he could well get the £100 back (or taken off next years bill).
So a determination (I just learnt about this yesterday when reading this forum - MSE is so educational!) is only used by the revenue if you don't fill in tax return?

fengirl_2

Yes, the £100 will be credited to his account and he can ask for it back if he has no liabilities coming up.
Determinations are issued by HMRC where a taxpayer fails to make a return for any year. It can only be overturned by filing a return.
It is possibel that HMRC will open an inquiry into this return to find out exactly why no CGT is due on the sale and why no tax is due on the lettings, ie they will ask for evidence to back up the tax computations. They have the power to go back 6 years and even more if they suspect fraud. But, if they are satisfied with the information which he submits, they may settle for one year.

gien

Thanks very much fengirl, that's very helpful