Messed up bad with tax returns. Need some advice

Tommyt

So, through my own stupidity I'm in a fairly large pickle...

I'm a non-resident who is renting out a small flat in the UK for the last few years. I'd assumed that my parents, who have been managing the place, had paid the tax on it. Turns out they haven't...

So, deducting the mortgage interest but nothing else, I'd say I've probably made around £230 a month on it, so my tax bill would have been tiny, sigh.

Now, obviously it's going to be very expensive with fines and all. I'm looking at around £2800 per year for the last 7 years but I imagine deductables would reduce it

Any advice or estimation of what it might cost me? I know I've been a prat, could do with some help.

zygurat789

Tommyt wrote: »

So, through my own stupidity I'm in a fairly large pickle...

I'm a non-resident who is renting out a small flat in the UK for the last few years. I'd assumed that my parents, who have been managing the place, had paid the tax on it. Turns out they haven't...

So, deducting the mortgage interest but nothing else, I'd say I've probably made around £30 a month on it, so my tax bill would have been tiny, sigh.

Now, obviously it's going to be very expensive with fines and all. I'm looking at around £350-400 per year for the last 7 years but I imagine deductables might even reduce it to practically nothing.

Any advice or estimation of what it might cost me? I know I've been a prat, could do with some help.

Non-resident, are you sure this is a fairly complex area
What else do you think you might be able to deduct?
Probable profits are not what you are taxed on.
The more I read, the more I reckon you know a fair bit.
Did you have, in these 7 years any other income in the UK?
And, are you a british citizen?

Tommyt

Yeah, I've cocked up my calculations and made an edit. I was going on my repayment mortgage which is obviously a good whack more than an interest only one. So I'm going to owe more.

I'm non resident. Spent a maximum of 30 days in the UK over the last 7 years each year and have 0 UK income aside from this

Deductables, not sure. But I've had periods of no tenants and fees for taking care of the property and cleaning etc.

So working on the basis of about £230 quid a month above my interest only payments.

I've basically just found out and have been scouring the net for info. Obviously feeling rather sick...

zygurat789

Tommyt wrote: »

Yeah, I've cocked up my calculations and made an edit. I was going on my repayment mortgage which is obviously a good whack more than an interest only one. So I'm going to owe more.

I'm non resident. Spent a maximum of 30 days in the UK over the last 7 years each year and have 0 UK income aside from this

Deductables, not sure. But I've had periods of no tenants and fees for taking care of the property and cleaning etc.

So working on the basis of about £230 quid a month above my interest only payments.

I've basically just found out and have been scouring the net for info. Obviously feeling rather sick...

I don't think you quite completed your edit.
Are you British?

zygurat789

Tommyt wrote: »

Yeah, I've cocked up my calculations and made an edit. I was going on my repayment mortgage which is obviously a good whack more than an interest only one. So I'm going to owe more.

I'm non resident. Spent a maximum of 30 days in the UK over the last 7 years each year and have 0 UK income aside from this

Deductables, not sure. But I've had periods of no tenants and fees for taking care of the property and cleaning etc.

So working on the basis of about £230 quid a month above my interest only payments.

I've basically just found out and have been scouring the net for info. Obviously feeling rather sick...

You are goint to have to go to HMRC sometime and you will need to tell them:-
Total rent received for each year to 5 April
Total allowable expenses for the year
No estimates or generalisations, so get to it.

Tommyt

Yes I'm British. I know I'll have to get on to HMRC too. I'm guessing I should employ an accountant before I present my figures as well.

Of course i want to try and pay the minium fines etc that I have to, so need to prepare properly.

zygurat789

I believe that, as a British citizen, you are entitled to a personal allowance.
This is currently £9440 and in 2005/06 it was £4895 so your tax liability could be nil.
You have failed to submit a tax return, HMRC view this as a serious offence, so serious that they have recently changed the penalty from the lesser of £100 or tax due to £100. So you may have a fine to pay, this increases as time goes by so get it done now.
Yes it would definitely be best, in the circumstances, to use an accountant. He will also help you with allowable expenses but do as much as you can and make sure all your documents are filed nivcely, sven years could be a lot of paper.
Just a thought but are either of your parents in a non tax paying situation, if so then you could pay them a management fee ,tax allowable to you, and not taxable in recipients hands.

Tommyt

Thanks Zyguat,

Having done further calculations my taxable income would never have exceeded my personal allowance in any year. I'm assuming I still have to make a declaration though? God this is going to be so frustrating if I get slapped with a big fine over literally nothing. Ah well, teach me a lesson I guess.

zygurat789

Tommyt wrote: »

Thanks Zyguat,

Having done further calculations my taxable income would never have exceeded my personal allowance in any year. I'm assuming I still have to make a declaration though? God this is going to be so frustrating if I get slapped with a big fine over literally nothing. Ah well, teach me a lesson I guess.

Absolutely

nomunnofun

Tommyt wrote: »

Thanks Zyguat,

Having done further calculations my taxable income would never have exceeded my personal allowance in any year. I'm assuming I still have to make a declaration though? God this is going to be so frustrating if I get slapped with a big fine over literally nothing. Ah well, teach me a lesson I guess.

Excellent - but have you applied for the rental income to be paid gross?

http://www.hmrc.gov.uk/international/nr-landlords.htm#5

Davide123

If you we're a non resident landlord, the managing agent should have withheld basic rate tax from the gross rent and paid it to hmrc. If this was done then you should be ok.