Paying tax on BTL Property going back a few years

NinaSwiss

[FONT=&quot]Hoping for advice on providing some pointers to the new guy(DH) I'm seeing.[/FONT]
[FONT=&quot]So far this is what I know.[/FONT]

[FONT=&quot]He's never declared income on his 2 BTL properties.[/FONT]
[FONT=&quot]Owned both for 7 years but moved out of one last year to live in current place co-owned with family member who now lives with partner.[/FONT]

[FONT=&quot]I suggested using an accountant to sort his taxes which he thinks is hindering his re-mortgage application on his residential place. Luckily, he's been able to get an extension on current mortgage whilst he looks into cleaning up his finances. [/FONT]

[FONT=&quot]He seems to be facing some challenges with sorting out his taxes (fine aside):[/FONT]
[FONT=&quot]-He had tenant voids in the past - how does he prove this ?[/FONT]
[FONT=&quot]-How does he prove past lower rent ?[/FONT]
[FONT=&quot]-He's done work on the properties(some recent) and used estate agents in the past but currently has no receipts to proves these. [/FONT]
[FONT=&quot]-I thought the accountant would be able to provide pointers on how to manage the situation and manage the negotiation with HMRC but he is insisting on receipts and providing very little guidance. [/FONT]
[FONT=&quot]- As they are furnished properties I also thought he'd be able to deduct 10% of rent as cost (at least for payment received prior to April 2016)[/FONT]

[FONT=&quot]I'm no expert but I'm inclined to suggest finding a different accountant if there is a better solution/options to manage the situation but perhaps there isn’t ? [/FONT]
[FONT=&quot]I’d appreciate some pointers on how to best manage the tax situation so that he doesn’t end up paying more than is due (if possible).[/FONT]
[FONT=&quot]Hopefully this then means that he is able to re-apply for a mortgage and also no chance of future issues with HMRC.[/FONT]

Pennywise

Whichever accountant you get will need the basic/core information. No one reputable will make things up out of thin air. At the very least, you can get copies of bank and credit card statements to prove some of the income/payments as a starting point. He should be able to get copies of the tenancy agreements and invoices from the agents he's used in the past. The art is to get as much as possible and then make informed estimates of everything else. The tax inspector will expect that all possible information/documents will be provided as the base - they know that you can get copies from the banks, suppliers, solicitors, etc and won't be impressed if you don't get them. Realistically, he will end up paying more than if he had kept proper records in the first place - if it wasn't like that, no-one would bother with records!

agrinnall

Pennywise wrote: »

The tax inspector will expect that all possible information/documents will be provided as the base - they know that you can get copies from the banks, suppliers, solicitors, etc and won't be impressed if you don't get them.

Actually, 7 years may be on the cusp of when some records become unavailable, while most organisations will have at least 6 years some won't be able to provide the 7th year.

Bluebirdman_of_Alcathays

agrinnall wrote: »

Actually, 7 years may be on the cusp of when some records become unavailable, while most organisations will have at least 6 years some won't be able to provide the 7th year.

...which will be a pain for the OP if HMRC deem this non-compliance to be deliberate, and request (up to) 20 years of records :eek: