Help please! Person managing property is not providing invoices/expenses

Kiki2019

Hello I wondered if can get some advice please?

I am in the process of doing tax returns for a property that I instructed a friend of the family to help me manage. However, he is not being forthright with the invoices /expenses information that I require.

We did not have a written contract , it was a verbal agreement for him to manage the property.

Any advice would be greatly appreciated on how I can proceed. Thanks

eddddy

Kiki2019 wrote: »

Any advice would be greatly appreciated on how I can proceed.

I guess the main options are:

1. Try to persuade him to do a better job
2. Sack him and get somebody more reliable to manage the property

You have a verbal contract with him, so in theory, if he's breaching the contract (i.e. not doing what he agreed) and you're losing money as a result - you could try suing him.

But that's a risky route, and perhaps you're not keen to take a friend of the family to court.

tacpot12

You need to complete your self assessment with estimated figures for the expenses (you could start with the previous year's figures and increase them by 10%), and tell HMRC that this is what you have done. Tell them how you have arrived at the figures.

You need to sack your friend within the next couple of weeks if they don't provide the data and invoices you need - HMRC will not tolerate estimated figures for very long because you are responsible for keeping accurate tax records. They will fine you significant sums if they think you are under declaring your income. Submit a revised Self Assessment form as soon as you have the correct data.

I expect that your friend is not a competent agent and is therefore exposing you as the landlord to some very signficant legal risks.

Kiki2019

Thank you both for your help!

G_M

tacpot12 wrote: »

I expect that your friend is not a competent agent and is therefore exposing you as the landlord to some very signficant legal risks.

Or your friend is cheating you for example by claiming to have spent more on repairs than the contractor's invoices show, or charging the tenants more rent than he is passing on to you........

Are you paying your friend to act as your agent?


See also
* Letting agents: how should a landlord select or sack?

martindow

Have you got the invoices or copies of them? If so I would do the work yourself or pay an accountant.


However you sort it, stop paying him and finish this arrangement.

AlexMac

As others have said above he's either
i) an honest cove who is really good at property management but hopeless at admin, filing and communicating with you
or
ii) A cheat (competent buildings manager or not) who may be padding the bills

Either way, you need to review the relationship... but two thoughts, subject to the size and complexity of the building being managed;

a) You'll propably get away with it as a one - off. In 20 years of doing self assessment (for two BTL properties with rental income over £20k pa) I've never been audited nor asked to justify or evidence the six summary sums of allowable expenditure which is all the taxperson needs and which take me ten minutes to enter on the online submission; ( 1. Rates, insurance, ground rents, 2. Repairs and maintenance, 3. Loan interest and financial costs (which is changing a bit and needs another one-liner later on the online form), 4. Legal, management and other fees, 5. Any services provided, including wages, 6 Any other stuff).

And although I'm always meticulously accurate, these could seem hookey as they have varied by up to £6k from year to year ( when, for example, my annual service charge has ballooned when the Local Authority freeholder has done major one-off repairs or cyclical decorations on the blocks. But never a question, challenge nor audit.

b) In future years, and unless this property is the size of Canary Wharf, is it so difficult to manage that you need to delegate the work? As well as doing self assessment on a couple of BTLs, I've also acted as Director/ treasurer for "Shared Freehold" Management Companies; one past primary residence, one current holiday home, both flats in big Listed buildings in maintenance-greedy Victorian mansions. Taking quotes for insurances, repairs, decor or new roofing, letting simple repairs contracts, keeping brief accounts and doing a couple of online annual returns to Companies House (which you'll only have to do if you're a registered company) ain't rocket science? So maybe conside DIY in future? Or paying for a managing agent if you don't mind the loss of control?

Either way, getcher finger out... Jan 31st looms!