Penalties for not declaring rental income

Dazed_and_C0nfused

pinnks said:

HasselbackPotato said:

pinnks said:

He is not only liable for late return penalties but also for failure to notify a new source of income.

What intrigues me is how "taxable" profits can be so low when letting properties is his only source of income considered to be sufficient to qualify him for Class 2 NIC.   

I have one small flat which I let, while living with family (because I'm unable to work at the moment). So my "profits" (which are too low to reach the tax threshold at about £7kpa) pay the bills.

I posted the link above (in response to another comment) showing how I'm eligible to pay voluntary Class 2 NICs (I had to put a space between gov and .uk because new users aren't able to post links).

Yes, I read that link but you may care to read the somewhat more detailed guidance on that issue in HMRC's National Insurance manual NIM74250 - Class 2 National Insurance contributions: special cases: property and investment income - HMRC internal manual - GOV.UK. You may, or may not, meet those criteria, especially as you have only one property but I leave you to ponder that and discuss with HMRC as appropriate.

Any penalty for failure to notify would be based on any potential lost revenue, i.e. the tax that should have been paid.  If there is none, the there may be no penalty but you can get chapter and verse on that in Compliance checks — penalties for failure to notify — CC/FS11 - GOV.UK.

It seems likely that you should have registered for Self Assessment, so may face late filing penalties for each of the returns that should have been submitted. Self Assessment tax returns: Who must send a tax return - GOV.UK 

How?  A late filing penalty is a penalty for the late filing of a tax return.

If no tax return has been issued how can a penalty be imposed for not filing it 🤔

pinnks

Interesting question for a case where you have failed to notify liability, hence my use of "may".  I think you may get a period of time to submit the return after rectifying your failure but have not looked into it in that level of detail.

Dazed_and_C0nfused

pinnks said:

Interesting question for a case where you have failed to notify liability, hence my use of "may".  I think you may get a period of time to submit the return after rectifying your failure but have not looked into it in that level of detail.

It's 3 months and a few days after HMRC issue the return (or notice to file a return).

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam126080

Sarahspangles

HasselbackPotato said:

Hoenir said:

HasselbackPotato said:

2. I imagine a penalty for late submission of self assessment.

Calculator can be found here

www.gov .uk/estimate-self-assessment-penalties

Yes. I would like to know if these are the penalties I'll be subject to.

It might be that I don't have to self-assess, considering I haven't been hiding any taxable income from HMRC.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

TheSpectator

Sarahspangles said:

HasselbackPotato said:

Hoenir said:

HasselbackPotato said:

2. I imagine a penalty for late submission of self assessment.

Calculator can be found here

www.gov .uk/estimate-self-assessment-penalties

Yes. I would like to know if these are the penalties I'll be subject to.

It might be that I don't have to self-assess, considering I haven't been hiding any taxable income from HMRC.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

But you can't have a penalty if you owe no tax on a disclosure.

Ultimately if OP meets the criteria for Self Assessment they should be submitting returns. What is the rental turnover and net profit - that is the determining factor.

Sarahspangles

TheSpectator said:

Sarahspangles said:

.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

But you can't have a penalty if you owe no tax on a disclosure.

Ultimately if OP meets the criteria for Self Assessment they should be submitting returns. What is the rental turnover and net profit - that is the determining factor.

The penalties are for failing to submit tax returns. 

Dazed_and_C0nfused

Sarahspangles said:

TheSpectator said:

Sarahspangles said:

.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

But you can't have a penalty if you owe no tax on a disclosure.

Ultimately if OP meets the criteria for Self Assessment they should be submitting returns. What is the rental turnover and net profit - that is the determining factor.

The penalties are for failing to submit tax returns. 

But the op hasn't said they have been asked to submit returns.

Sarahspangles

Dazed_and_C0nfused said:

Sarahspangles said:

TheSpectator said:

Sarahspangles said:

.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

But you can't have a penalty if you owe no tax on a disclosure.

Ultimately if OP meets the criteria for Self Assessment they should be submitting returns. What is the rental turnover and net profit - that is the determining factor.

The penalties are for failing to submit tax returns. 

But the op hasn't said they have been asked to submit returns.

If someone has untaxed income from property, they either need to submit a Self Assessment return or if their income is <£2,500 contact HMRC, which I assume allows HMRC to decide whether to offer Simple Assessment. If they needed to send a return, the late penalty applies.

Dazed_and_C0nfused

Sarahspangles said:

Dazed_and_C0nfused said:

Sarahspangles said:

TheSpectator said:

Sarahspangles said:

.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

But you can't have a penalty if you owe no tax on a disclosure.

Ultimately if OP meets the criteria for Self Assessment they should be submitting returns. What is the rental turnover and net profit - that is the determining factor.

The penalties are for failing to submit tax returns. 

But the op hasn't said they have been asked to submit returns.

If someone has untaxed income from property, they either need to submit a Self Assessment return or if their income is <£2,500 contact HMRC, which I assume allows HMRC to decide whether to offer Simple Assessment. If they needed to send a return, the late penalty applies.

Have a read of this,

A late filing penalty can only be imposed if a return or notice to file a return has been issued and the return is late.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

If you register for self assessment late (within three months of the filing deadline or later), the deadline is extended to three months from the date of issue of the return. The revised due date will be shown on the Tax Return/notice to file that you are sent.

Sarahspangles

Dazed_and_C0nfused said:

Sarahspangles said:

Dazed_and_C0nfused said:

Sarahspangles said:

TheSpectator said:

Sarahspangles said:

.

The link I shared allows you to proactively disclose that you haven’t been submitting returns, in return for some leniency on the penalties.

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

But you can't have a penalty if you owe no tax on a disclosure.

Ultimately if OP meets the criteria for Self Assessment they should be submitting returns. What is the rental turnover and net profit - that is the determining factor.

The penalties are for failing to submit tax returns. 

But the op hasn't said they have been asked to submit returns.

If someone has untaxed income from property, they either need to submit a Self Assessment return or if their income is <£2,500 contact HMRC, which I assume allows HMRC to decide whether to offer Simple Assessment. If they needed to send a return, the late penalty applies.

Have a read of this,

A late filing penalty can only be imposed if a return or notice to file a return has been issued and the return is late.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

If you register for self assessment late (within three months of the filing deadline or later), the deadline is extended to three months from the date of issue of the return. The revised due date will be shown on the Tax Return/notice to file that you are sent.

So instead they pay a Failure to Notify penalty?