Tax

Freespirit38

Hi all,
I’m in a bit of a pickle here and need some advice please. I have a buy to let mortgage and have been renting out the flat for the past 10 years. I wasn’t advised that I need to declare this as an income. My flat is now being sold and I’m worried about the tax I need to pay now and all the backdated tax which I’m willing to do. If I’d known about this before I would have. Please advise what consequences I would face ☹️

mrginge

You will go to jail if you sell the house.

I suggest you contact HMRC immediately to discuss.

G_M

Freespirit38 wrote: »

Hi all,
......have been renting out the flat for the past 10 years. I wasn’t advised that I need to declare this as an income.

Who on earth did you think should advise you?
It is our duty as citizens to a) know the law and b) abide by it

(I wonder what other aspects of property letting you've ignored -
* New landlords: advice, information & links)

You cannot somehow divert responsibility for your tax affairs onto someone else (unless you've been paying an account to manage your tax all this time and he failed to advise you.....?).

More constructively, do as mrginge suggests above.

If you voluntarily approach HMRC and offer to pay, yes, they will go through your accounts closely, yes, they will back-date your tax bill, and yes, they will charge you late-payment fees.

But if you do nothing and they find out, they will throw the book at you with additional charges and potentially criminal charges for tax evasion too.

Come clean. You've been running a business for 10 years, making (I trust) a profit, and like any business (except Amazon of course) you owe tax.

csgohan4

OP I would also look into any other legal issue you may have missed out such as gas safety checks, protecting deposits e.t.c.

Take financial advice via an accountant, you will be expecting fines as you have not declared income.

What did you expect? You had income but you didn't declare??

AnotherJoe

Freespirit38 wrote: »

Hi all,
I’m in a bit of a pickle here and need some advice please. I have a buy to let mortgage and have been renting out the flat for the past 10 years. I wasn’t advised that I need to declare this as an income. My flat is now being sold and I’m worried about the tax I need to pay now and all the backdated tax which I’m willing to do. If I’d known about this before I would have. Please advise what consequences I would face ☹️

Do i take it you are aware of the fact you may have to pay capital gains tax on profit from the house as well? With a bit of luck the profit you make will at least cancel out the profit from rental.


Go and see an accountant and have them produce a set of figures for HMRC. The issue may well not be the profit you made but not declaring for ten years.

antrobus

Freespirit38 wrote: »

Hi all,
I’m in a bit of a pickle here and need some advice please. I have a buy to let mortgage and have been renting out the flat for the past 10 years. I wasn’t advised that I need to declare this as an income. My flat is now being sold and I’m worried about the tax I need to pay now and all the backdated tax which I’m willing to do. If I’d known about this before I would have. Please advise what consequences I would face ☹️

You have two choices. One, cross your fingers and hope that HMRC never find out. Two, fess up to HMRC and pay the tax; income tax on the rental income, plus capital gains tax on the sale of the flat.

Getting caught is more expensive because of the penalties levied. You will not go to jail. HMRC only prosecute for serious cases, and your tax evasion ain't serious.

If you opt for fessing up, get an accountant. They are used to this sort of thing.

csgohan4

however don't expect it to be cheap via an accountant, especially if your going to be investigated via the HMRC

AnotherJoe

True but at least the accountant will be able to add in all the expenses the OP will likely miss which will pay for the cost and make sure everything is hunky dory before they fess up.

00ec25

i am intrigued why the OP has, for the last 10 years thought that he did not have to pay tax on rent when every year there are posts on here explaining that you do and there are plenty of high profile news stories about people who were caught

isn't it still the summer holidays?

AnotherJoe

00ec25 wrote: »

i am intrigued why the OP has, for the last 10 years thought that he did not have to pay tax on rent when every year there are posts on here explaining that you do and there are plenty of high profile news stories about people who were caught

Well, the fact that every year there are posts explaining that you do, shows that every year it's new to someone. And the fact that every year there are people who were caught, shows that every year there are people who didn't know or who deliberately avoided.

Also, and this might not apply to the OP but there are even more people who think that if they don't make any profit they don't need to declare. Many of those will calculate profit as rent minus mortgage thinking the whole mortgage and not just the interest, can be deducted.

csgohan4

AnotherJoe wrote: »

Well, the fact that every year there are posts explaining that you do, shows that every year it's new to someone. And the fact that every year there are people who were caught, shows that every year there are people who didn't know or who deliberately avoided.

Also, and this might not apply to the OP but there are even more people who think that if they don't make any profit they don't need to declare. Many of those will calculate profit as rent minus mortgage thinking the whole mortgage and not just the interest, can be deducted.

And then every year a LL fails to protect deposits or do gas safety checks and complain why their section 21 is invalid