Tax return am I in trouble ?

Biggie

Hi Guys,

Really need some advice; I’ve had a letter from IR asking me if I need a tax return.
Here’s my situation:

I’ve been a higher rate tax earner for 2 years, I’ve had a buy to let property for 4 years but never made any money on it, probably put money into it. Also I don’t have much savings to declare as most of my money is in a mortgage off set account.

If anything I’m probably owed money as I’ve been paying into a pension for a couple of years. But I’ve never done a tax return.

I have a few questions:-

1) Will I be in trouble by the IR for not doing a tax return earlier because of the buy to let even though I’ve never made a profit?
2) Regards to the buy to let most of my loses incurred we’re probably in the first two years (i.e. setup costs etc etc), I believe you can carry these loses over, will it still be possible for me to do this?.
3) I only got the letter 2 days ago so it’s not possible for me to get the form in at the end of this month, will they still do the calculations for me?
4) Is it worth me paying an account to do the tax return ? And how much are they likely to cost ?


Thanks

A_Nice_Englishman

(1) You are supposed to tell HMRC when you start a property rental business so, yes, you may be in trouble with them unfortunately.

(2) Don't know. I was always lucky enough to make a modest profit

(3) You can do the return online and the software will do the calculations for you. In fact I would thoroughly recommend doing it this way rather than on paper.

(4) You don't seem very sure about whether you've made a profit or not so I guess your records are not very up to date. Paying an accountant to sort them out could be expensive.

Robert_Sterling

Why did you not fill in tax forms particularly as you might have got a rebate?

Biggie

Robert_Sterling wrote:

Why did you not fill in tax forms particularly as you might have got a rebate?

guess it was because I was just being lazy and secondly a little naive when it comes to tax returns, I thought the IR would let me know when I need to do a tax return.

mrs_deadline

I'd say only go to an accountant once you've got all the back paperwork together (bank statements, invoices, receipts, etc.) for the BTL business. Ideally you need evidence of all income and expenditure, to prove the losses.

You're the best person to tackle this - all you'd be paying the accountant to do, initially, is nag you into producing documents. Once you have it all together and in order, they'll be able to quote you a much lower fee for drawing up accounts/filling in tax forms.

Have you called the Inland Revenue helpline for their advice on the missed years? What do they suggest doing about the tax returns you've missed?

Robert_Sterling

I agree 100% with Mrs-Deadline.