Didn't declare tax on rental income

clarew132

Hi everyone
This is my first ever post so I'm hoping for a little advice. I rented my property from Sept 08 to April 09 without declaring the tax on it (didn't know I had to!). From April 2009 - April 2010 it is covered because I now live in the USA and have to do a UK tax return, but there are still those Sep-Apr months not covered.
In an attempt to get sorted (and because I was stressing about being dodgy when I found out I was supposed to pay)... i rang HMRC and they told me to send them a letter basically detailing what income I'd made. Problem is, since I sent that, I have heard nothing back from them (this was in Feb). Do I need to chase them or will they have the info on file now? I'm surprised they haven't contacted me to finalise payment/go through the process of deductions etc.

On my 2009/2010 tax return it asks when the property started being let out, and I've put the true date on there. I guess what I'm asking is, do I need to ring them again and ask what's going on, or is it normal for them just to file the info and when the tax return is filed it'll all get sorted then? Appreciate any advice!

Yorkie1

It's clearly on your mind, so I'd give them a ring to find out what's happening. It can't hurt and might help you feel easier about it.

tbs624

Make the phone call, and follow it up with a letter confirming your understanding of what was said.

crescent2012

We have bought a property at peak market in December 2007 with intention to converted into two flats and then to sell it. Unfortunately as we were 1st time landlords things didn’t go as planned and ended up managing to finally convert the house in march 2009. We put the flats on the market for sale but no one managed to sell. So far we have made a loss of £50,000 to what we have receipts. For the past year since the bank rates have changed we have start making a profit of £3000 a year -after deducting the expenses. We were never aware that we have to pay tax on it as we so far made a huge loss initially. Do we still have to pay taxes on the profit we make ? Appreciate any advice !

somethingcorporate

Well, theoretically yes but you can bring forward prior year losses to offset.

If this has been going on for a number of years you should probably speak to an accountant to help you sort it out, it will be money well spent (and you can offset it against tax )

sunshinetours

crescent2012 wrote: »

We have bought a property at peak market in December 2007 with intention to converted into two flats and then to sell it. Unfortunately as we were 1st time landlords things didn’t go as planned and ended up managing to finally convert the house in march 2009. We put the flats on the market for sale but no one managed to sell. So far we have made a loss of £50,000 to what we have receipts. For the past year since the bank rates have changed we have start making a profit of £3000 a year -after deducting the expenses. We were never aware that we have to pay tax on it as we so far made a huge loss initially. Do we still have to pay taxes on the profit we make ? Appreciate any advice !

The losses of the actual conversion and building works (capital items) are different from pre and post letting expenses. You haven't made any loss yet on the conversion as you haven't sold, however some expenses may be able to be offset against rental income

If you aren't aware that you have to pay tax on rental profits i would certainly suggest you do indeed seek a local accountant by recommendation to sort this out for you and to point you in the right direction going forward

tbs624

If you have a source of income then HMRC want to know about it so expect you to declare it and that applies whether or not you are making an actual profit.

Google their Property Income Manual (PIM) so that you can belatedly acquaint yourself with what you may set down against rental income
(note that the interest portion is the only part of your mortgage repayments which you can set down)) and , as the others have said, get yourself an accountant who is used to dealing with rental properties.

If you began to let the property in March 2009 then that income will fall into the 2008-2009 tax year, you then also have undeclared income for the tax years 2009-2010, 2010- 2011, plus the current tax year ending on Apr 5 2012.

You presumably missed the final filing day for 2010-2011 (yesterday) but you have until Oct 31st 2012 for paper filing for the current tax year, or Jan 31st 2013 if being done online.

Get on with getting the income for the previous tax years reported pronto, with guidance from that accountant.HMRC will apply penalty payments for late declaration and late payment of any tax due.

Yorkie1

tbs624 wrote: »

You presumably missed the final filing day for 2010-2011 (yesterday) but you have until Oct 31st 2012 for paper filing for the current tax year, or Jan 31st 2013 if being done online.

Hasn't HMRC extended its deadline until tomorrow, in light of the strike?

Or was that extension cancelled?

Thrugelmir

Yorkie1 wrote: »

Hasn't HMRC extended its deadline until tomorrow, in light of the strike?

Or was that extension cancelled?

Deadline is tomorrow.

helenje1

Hello

This is my first ever post on here and I was hoping to get some advise from someone

I have been renting my flat out since July 2010 and I did not realise that I have to declare it for tax purposes as I am covering the mortgage payment and that is it, I have even made a loss on the flat as I had to have a new boiler installed last year costing me £1000, along with other other expenses for maintaining the property

I have spoken to the tax office today to explain and register my flat as a rental property and I am happy to pay any tax owed but I am terrified of being hit with a big fine that I cant afford.

I have been told that you can appeal a fine, but are people successful on appeal? or ignorance not an excuse? Is there any advise for writting this appeal please it was a genuine mistake!

Thanks

Helen