Panic over self assessment submission times

ANGLICANPAT

Ah ok thanks agrinnall, Ill do that tomorrow . Chrismac - I suppose thats to be expected but its them that dish out the fines for getting it wrong isnt it , and Ive no experience, so Im exercising great caution!:think: It didnt help my confidence to find that the NLA info cant be trusted , I was relying on cross referencing that with the HM site.
Thanks again everyone.

chrismac1

Tax in this country is not a black and white matter. In many ways it should be as it has been around in one form or another since 1086, so successive Governments have had plenty of time to make it black and white if they wanted to.

To take one example from the list, you claim the cooker as a repair. I am presuming here that the existing cooker was functional in the sense that it cooked things. You have bought a new one, but unless it is made of solid gold it is most probably of a similar standard, given the pace of technical change, as the previous cooker was when it was first bought.

So it is a repair. In the good old days when HMRC employed professionals, given the extent of your likely claims, you might have had a visit from your local office and they might have kicked the tyres on some of these grey areas.

Not today. See other posts of mine on their current hiring strategy involving London Zoo. I have 2 or 3 clients per year who make claims in excess of £50k, many over £100k, in this exact area.

No tyres have been kicked over the past 5 years.

Pennywise

ANGLICANPAT wrote: »

The property was built 60's, is let unfurnished,not in a conservation or deprived area---- was livable in , but dilapidated somewhat .

Be very careful as the costs of renovation may not be allowable against rental income for income tax, but instead may be capital and only allowable against eventual sale proceeds for capital gains tax.


http://www.hmrc.gov.uk/manuals/pimmanual/pim2020.htm

"Cost of land and buildings is capital
The cost of land and any buildings on it is capital expenditure. So is the cost of any new buildings erected after letting has started and any improvements. Capital expenditure cannot be deducted in computing the profits of a rental business. Nor can a revenue deduction be claimed for the depreciation of capital assets or for any loss on the disposal of capital assets. But there are separate reliefs for some capital expenditure (see below).

Other examples of capital expenses include:

expenditure which adds to or improves the land or property; for example, converting a disused barn to a holiday home,
the cost of refurbishing or repairing a property bought in a derelict or run-down state,
expenditure on demolishing a derelict factory to clear space for a new office building; the cost of the new building,
the cost of building a car park next to a property that is let,
expenditure on a new access road to a property,
the cost of a new piece of land next to a property that is let."

BUT

"Repairs etc after a property is acquired
Repairs to reinstate a worn or dilapidated asset are usually deductible as revenue expenditure. The mere fact that the taxpayer bought the asset not long before the repairs are made does not in itself make the repair a capital expense. But a change of ownership combined with one or more additional factors may mean the expenditure is capital. Examples of such factors are:

A property acquired that wasn’t in a fit state for use in the business until the repairs had been carried out or that couldn’t continue to be let without repairs being made shortly after acquisition.
The price paid for the property was substantially reduced because of its dilapidated state. A deduction isn’t denied where the purchase price merely reflects the reduced value of the asset due to normal wear and tear (for example, between normal exterior painting cycles). This is so even if the taxpayer makes the repairs just after they acquire the asset."

You need to think carefully about the overall state of the property when you bought it. You'll see from the above that if you bought it cheap because it was dilapidated and/or if it wasn't in a fit state to rent when you bought it, then everything you spent on it to bring it up to standard may be argued to be capital. I'd suggest that you keep photos, estate agent brochures etc., as you may, one day, need to prove that it was habitable and rentable when you bought it if you want to claim tax relief now against rental income, rather than wait and claim tax relief against capital gains when you eventually sell it!

My usual advice to clients is that they should always rent out the property, in whatever state, when they first buy it, doing the bare minimum of work necessary to make it habitable. This first tranch of cost isn't allowable. The first rental will undoubtedly be cheap given the run-down state of most old properties bought for rental. After the first rental, then you do all the upgrading and renovations, ready for the second tenant to rent a quality home at much higher rental price. This almost guarantees tax relief against rental income on the majority of the renovation costs as the mere fact that you rented it out in virtually the state you bought it proves that it was habitable and then proves that your subsequent renovations are for routine maintenance, wear and tear, updating etc.

agrinnall

Pat, you need to be cautious about chrismac's posts, while any technical advice offered is likely to be correct he has a major bee in his bonnet about HMRC that colours everything he posts.

ANGLICANPAT

Thank you Pennywise . This is a big consideration for me I know, as the property was already in my ownership and will have CGT liabilities when I sell it . ( I was hoping its CGT liabilities would die with me if kept hold of it till my death and it passed to my family and they sold immediately but sadly I believe now thats not the case so I may sell one day)

It seems I should carefully try to work out which parts of the upgrading of the property would qualify for putting against income tax as if I miss them off now, theyd be lost as I couldnt claim them under capital gains tax later on.

chrismac1

It depends on your approach to risk. The mere length of the copy and paste above makes it clear this is a grey area of tax. As I said above, the Government has had nearly 1,000 years of taxing us, everything could be black and white if they wanted it to be.

Whilst it is right to be cautious, from a practical point of view I have never handed over as much as a penny for any client under a challenge from HMRC, and the level of enquiries in my practice is under 50% of the UK national average.

So in my opinion I am a long way from being aggressive in these matters.

ANGLICANPAT

Im a bit of a coward when it comes to some risks , some dont sit happily with me . Id rather lose money than get involved with challenges from any kind of authorities where Im not 100% sure of my position and it can mean ongoing hassle and perhaps unknown consequences. but Im a bit more ambivalent about the kind of risk involved with equities etc. I think in this tax return , Ill probably be quite conservative with my allowances . I understand and appreciate your viewpoint though, thanks .

Karmacat

AnglicanPat - I do my own tax return, which involves a lossmaking French apartment, and I'm self employed in my main job, so I know a bit about the self employment forms. As we're still a month away from the filing date, HMRC themselves will probably talk to you. Not sure if they have appointments still, but ringing them is a real possibility to sort out any confusion.

ANGLICANPAT

Really? I thought that was like waving a flag to direct them to a novice who may well muck up and be easy pickings on submission. Id actually like to do that if thats not the case .Wonder if you have to declare your name and NI before they will speak to you. Other problem Ive heard people mention is that if you dont get something in writing , it was never said , so if you had a tax office newbie ......

Spidernick

To my mind submitting a paper tax return is like going to the post office to renew your VED: a lot more hassle and not to be recommended.

Unless the OP doesn't have access to the internet (posting here would suggest that's not an issue!) I'd urge him/her to register for on-line filing. You then have the assurance of knowing that the return hasn't been 'lost in the post' as well as getting an extra three months to file.