Does what I have put here count as two homes…

LittleNoddy

Hello everyone, I am asking a question on the behalf of someone else I would be grateful of any advice.

Ok Person A and Person B are related, Person A buys a flat, but does not live in it and rents this out to joe public at a fee. Person A say’s he lives at the flat but does not, and lives in another house with Person B, but has not informed the council or the tax office that they own one but live somewhere else i.e. with Person B.

Also what taxes are due if any by Person A.

Any advice welcome.

Little Noddy

PasturesNew

Person A: Income tax on the rental.

If any benefits are involved at the Person B address, there could be fraud involved (depending what they're claiming/what they've put on those forms).

Person B: Are they claiming single person's council tax? A 25% reduction? If so, that's fraudulent and they'd need to pay full council tax.

What are they going to do for the Census? Illegally fill that out too?

birkee

I don't think people should offer advice on this one.
Especially if you're a taxpayer!
Who wants to assist fraud of the other taxpayers in this country.

tbs624

As Pastures says, plus.....

Did person A buy the property on a residential mortgage? If yes, have they sought their Lender's consent to let?

If trying to let "under the radar" has person A met legal obligations on gas safety certs, tenancy deposit registration etc?

Has person A notified his/her insurers that the property is tenanted?

silvercar

Person A should be declaring rental income for income tax and will have a CGT declaration to make for CGT on sale.

Did person A once live in the property as their home? If not how did they get a mortgage? By falsely declaring that it was to be their home? As its a flat there is also the question of the freeholder's consent to let.

Person B would have to declare the second occupant for council tax and could effect any other benefits if they claimed.

LittleNoddy

Person A flat was purchased as a lease hold... I think that's right as it's not freehold that's for sure.

Person A bought the flat many years ago however they was not there more a couple of weeks after decoration etc, there mail sent there as it shows that they live there, however as I have stated to them that there is a paper trail at the royal mail and it's only a one bedroom flat. If you see my point.

So I am asking the advice to I can present to them that this is what neededs to be done to resolve this little matter.

I think it's about time that someone presented them with the facts.

Little Noddy

G_M

Person A:

Income tax on the rent
Capital Gains tax on sale
Insurance? Is it invalid or does the insurer know of of the rental?
Mortgage. Is the contract being breached or does the lender know?
Freeholder. Is permission to let required? Obtained?
Council tax - who is paying?
Utilities. Whose name are they in and who pays?
Rental. Are all landlord obligations being met (gas, repairs etc)?
Tenant rights. Does the tenant know his rights as an AST tenant?
Landlord. Does HE know the tenant's AST rights? (eg security of tenure, access by LL etc)

There are multiple possible issues here, many possibly criminal: fraud, tax evasion, benefits fraud, H&S breaches.
Also possile civil issues: breach of tenancy agreement (implied terms as ell as explicit)

There are also many ways his could come to light, not just 'Royal Mail'.

silvercar

You can either jump in like a bull in a china shop or try a softly, softly approach.

One option is to start putting things right from here rather than revisit history.

That would mean start be declaring the rent to the tax man. Asking the lender for consent to let and the management company or the freeholder of the block for consent.

Income tax on the rent In all likelihood, in the early days the rent covered the mortgage and not much else. So owning up to the revenue now with no back tax to pay shouldn't incur massive fines. Start getting together receipts for expenses and mortgage statements.
Capital Gains tax on saleNot an issue if its not yet been sold.
Insurance? Is it invalid or does the insurere know of of the rental?In rental properties the insurance is generally a block insurance, so this shouldn't be an issue. If the landlord wants contents insurance they will have to get insurance that is for landlords not residents.
Mortgage. Is the contract being breached or does the lender know?Ask on a no name basis initially what their view would be if the property was let and what the costs would be.
Council tax - who is paying?Should be the tenant.
Utilities. Whose name are they in and who pays?Again should be the tenant.
Rental. Are all landlord obligations being met (gas, repairs etc)?Lets assume they are, why wouldn't they be.
Tenant rights. Does the tenant know his rights as an AST tenant?Tenant's problem.
Landlord. Does HE know the tenant's AST rights? (eg security of tenure, access by LL etc

)

There are multiple possible issues here, many possibly criminal: fraudOnly fraud if the mortgage was obtained with the intention of letting it out., tax evasion,better to sort it soooner rather than later. benefits fraud,by person B claiming single person tax or other benefits? H&S breaches??.

mlz1413

OP are you prepared to fall out with this friend?
From what you have said there are so many aspects that need addressing.