Not declaring income from rented property

theGrinch

maybe if they take Dave at HMRC out for lunch they can secure a "sweetheart deal"....everyone's doing it with Dave.

budgetdiyer

If they use an agent at all for letting either property, they will get caught. HMRC can and do request lists of let properties (and the owners details) from agents, and the agents have to provide full information.

tbs624

pokey - I notice that you are in Edinburgh - is this friend and her property/ies up there too?

If yes is she aware that by law LLs need to be registered in Scotland?

Fuzzyness

in fact give me her name and i'll shop her to HMRC. why should we pay our taxes and not her???

Simon_gloster

pokey128 wrote: »

Hi
I was speaking with a friend of mine the other day who failed to sell her house before buying a new one and so is renting it and her husbands first house out.

She has recently started a business and so we were discussing tax returns and she said she has never done one before. She doesn't do one for her flat because they need the money and don't do one for her husbands because they are planning on selling it in the next couple of years.

She doesn't think there is any chance of her getting caught but I'm not sure - what are the penalties if she does? (this has been going on for 4 years)

Your friend...this is one of the most ridiculous and common mistakes made from Landlords.

As it has been said, it is Tax Evasion. It clearly can carry a prison sentence. They must have know they were getting an 'income' and that income is taxable!!! As they are self employed that is even a more worry.

The rental income should have been declared when the self employed books were done.

4 years worth of tax evasion.....I hope they like metal doors and stodgy food.

Makes me sick.

mumofthetwins

Hi
Just a bit info ..
We rent out a house we used to live in before we bought our new house ( rented it out for 6yr ) We were told by our morgage advisor that we did not need to declair as we werent making a profit - due to morgage costs etc ..... he LIED !!!
Last year we recived a letter from HMRC stateing they knew we were renting and not declairing it :eek:
They said we could only claim the interest costs and expenses .... something the morgage advisor also did not say...
I immediately got in touch provideded everything they asked for ( reciepts for last 6 years - alot we had thrown away, morgage payments etc ...) and explained it was a genuine mistake.
This lead to a good few months of sleepless stressful nights and a lot of added stress over christmas, but in the end HMRC said it was a genuine mistake and because we were very helpfull, we did not have any fines or back tax to pay :T
We are now filling tax returns and doing everything properly

So please tell your friend HMRC can catch up with them ( we did not use an agent either)
Lisa

tbs624

OP - your "friend" needs to declare all income to HMRC. The sooner they 'fess up the better for them.

Their best bet is to get a a suitably experienced accountant to help them draw up appropriate retrospective accounts for each of the tax years (fees can be set down on tax return).

Did she have Lender Consent to Let in place on these properties, if they are subject to resi mortgages?

tbs624

mumofthetwins wrote: »

We rent out a house we used to live in before we bought our new house ( rented it out for 6yr ) We were told by our morgage advisor that we did not need to declair as we werent making a profit - due to morgage costs etc ..... he LIED !!!
Last year we recived a letter from HMRC stateing they knew we were renting and not declairing it :eek:
They said we could only claim the interest costs and expenses .... something the morgage advisor also did not say...

My bolding. Thanks for posting your experience.

However, note that a mortgage advisor is in the business of ...erm..flogging you a mortgage product.

Why on earth would you rely on them for advice on tax issues relating to letting a property out?

Put " letting property tax" into google and the first site up is a direct.gov.uk one which gives the basics. Try "HMRC letting property tax" and you get that one plus a link to the HMRC PIM (property income manual). It's pretty basic research before letting a property out.

pokey128

wow! Thanks guys. I was pretty sure they had to do it! They are renting it through an agent (recently changed agents as previous was was dodgy) and I'm pretty sure they have registered as landlords and would hope they are paying insurance but couldn't be certain. Nor could I be sure what kind of mortgage they have on the flats - I do know that it must be a base rate tracker though as it has dropped by 400 a month since the 0.5 rate came along.

As much as I don't want her to get into trouble- she is not listening to me when I tell her to do it. I kind of wish there was a way of reporting her without any chance of it coming back to me.

theartfullodger

pokey128 wrote: »

............

As much as I don't want her to get into trouble- she is not listening to me when I tell her to do it. I kind of wish there was a way of reporting her without any chance of it coming back to me.

Easy...

https://online.hmrc.gov.uk/shortforms/form/TEH_IRF?dept-name=TEH&sub-dept-name=&location=39&origin=http://www.hmrc.gov.uk

and assuming the property is in Embra & they ain't registered (check by looking up the property here.. (""Search"")
www.landlordregistrationscotland.gov.uk
)
http://www.edinburgh.gov.uk/a_to_z/service/940692/landlord_registration

Seems quite a simple, patriotic, issue to me: We don't want tax cheats in our country thanks... and any crooks cheating should be grassed up..

If all the fiddlers were made to pay the tax they owed the rest of us would have one of..
a) Less tax to pay or
b) Better public services with the extra income or
c) Lower public sector debt...

What's not to like eh??