Declaring Rental Property late

Biggie

I have a rental property which has never been declared for 12 yrs.

I'm not making excuses and I know it's wrong however the property has never made any profit from rental. In fact if I've calculated the 10% furnishing allowance I've made losses of a few thousand.

From last year it has started to make substantial profit which makes me nervous hence I would like to declare. I also understand that not declaring may work against me as I'm not able to carry over my losses.

I see I have a few options

a) Declare property from now and start paying tax on the profit
b) Seek advice from HMRC and declare property historically pay the fine and hope HMRC allow me to carry the losses over.

To make maters worse I've submitted a couple of tax returns without declaring the income/losses

Also who is best qualified to advice in such matter I guess an accountant would just advice to declare and help with the return. Is there any kind of 'Tax specialist' who could look at my figures and give me options..

Thrugelmir

Suggest you consult an accountant, be guided by them as to the best way of presenting your case. No declared profit in 12 years would raise questions that's a certainty.

happycamel_2

A tax advisor can advise you about tax efficiency but not avoidance so they too will have to advise you to declare. I'd advise phoning HMRC helpline and discussing how you should go about doing this, you don't need to tell them who you are, you can have a theoretical discussion.

I'm doing that right now because I've taken on a client who artificially split their business and didn't register for VAT (it made sense to them, two operations but one legal ownership). HMRC have been very helpful in advising me how to resubmit the previous six years figures and calculate the VAT payable.

grifferz

If it was me [I wouldn't have failed to declare the income, but..] I would:

• Start declaring income going forward
• Talk to an accountant about past trading history with a view to demonstrating that there was no profit thus no tax to pay
• Hope there are no fines

Annisele

No profit in 12 year does sound unlikely.

Are you counting the capital repayments on a mortgage as an expense? If you are, you can't offset them against tax - you can only offset the mortgage interest.

theartfullodger

Started making substantial profit eh? Why the sudden change.

Your story is implausible - were you renting out at below market rent, perhaps to a relative? If so HMRC may assess tax & fines based on market rent, hopefully.

Anything else you've "forgotten" to do? Permission to let from mortgage lender? Gas safety certificates? Landlord insurance? Safe electrics? No receipts for alledged expenditure? Rent collected in cash? Deposits protected?

Cheers!

missile

I was in a similar situation having not declared for 3 years. I was able to demonstrate to Inland Revenue that I had made zero profit and thus had no tax liability. I did have a few sleepless nights though and it really is not worth it.