Can I claim expenses on part of a generic builders invoice

vertex

Hi,

I have a rental property. I had builders do work on my personal property, but they also did work on the rental (fixing some render and a chimney leak). They invoiced me a generic £6k invoice for 'Property Maintenance' and addressed it to my rental property.

Of course, Im not going to claim the whole amount as a business expense, because... well... it wasnt. But I estimate about £2k of it was.

However, I have since fallen out with the builders and cant go back to them to itemise the invoice.

So, should I claim the £2k and make a note of my reasoning why its £2k? (approx time builders spent working on the rental property, plus I did take a few photos. Anything else? [I dont have any written communication]), or should I not bother trying to claim any of it and risk an investigation/enquiry?

Thanks

subjecttocontract

I would claim an appropriate amount, keep copies of the paperwork and calculation to back up your claim as you would with any receipt.

Isthisforreal99

Are you qualified to estimate it was £2k - seems expensive to repair rendering and fix a leak but depends what work was actually required. To compare - what was the other work done? Just because 1/3rd of the time was spent on your rental it doesn't mean it's reasonable to split the bill that way, e.g. materials may have been much higher on the other property.

vertex

Maybe I wont try and claim it. The only paperwork I have is the generic invoice (albeit invoice to the rental), a few photos, my own list of work done, and approximate amount of hourse they spent on the place. Not sure if HMRC would see this as being enough 'evidence'.

sherlock228

https://forums.moneysavingexpert.com/discussion/comment/82127173#Comment_82127173

HMRC won't see anything at all unless you are investigated
however, if you are, then a £6k invoice to the rental may never actually be questioned if it does not detail the actual work done.
Your question is really one of your own moral stance rather than paperwork

It sounds like the builder was being "cooperative" in producing the invoice in the first place wholly to the rental knowing full well the bulk of the work did not relate to it.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/82127235#Comment_82127235

I agree with this. If you were so minded there is a high chance you would get away with charging all to the rental. After all, you have the paperwork to "prove it". Whether you do or not is up to your conscience. The downside is that, if you were investigated, by declaring that some of the expenditure was not on the rental, you could open up a can of worms on how much could be claimed.

eskbanker

Assuming that falsely claiming all £6K as a business expense would be of some financial benefit to OP, I wouldn't see it as being a question of 'morals' or 'conscience', it's about whether or not to commit fraud, a criminal offence…

subjecttocontract

By way of example......We submitted the tax returns for our portfolio of rental properties a few years ago. HMRC queried some of the amounts claimed and sent me a long list of questions about the self assessment. They asked for copies, receipts etc. I decided that rather than answer all the individual questions I would first of all send them my excel spreadsheet which detailed all of the individual expenses against each of the properties. They thanked me for my reply and the spreadsheet and said no further action was necessary.

So even when investigated it seems that good detailed records can be worthwhile.

Dead_keen

Some thoughts:

1. Yes, you can apportion the costs between your rental property and your personal property. If, like you, you don't have a breakdown for the work, do that apportionment on a sensible basis that you can justify. And keep contemporaneous records to justify it. So if you have a quote for fixing your own property from someone else but in the end did both at the same time, that first quote may well be relevant in working out what is sensible.
2. Once you have worked out the business element, the next question is to work out what element of it is (i) a capital expense (that will reduce your capital gain when you sell it), and (ii) a revenue expense (that will reduce your rental profit). If, for example, you'd owned the property for ten years and then the chimney leaked, that sounds revenue. If you bought it knowing it leaked and that you'd have to spend money doing it up before it is safe to rent, that sounds capital (and so will not reduce your rental profits).

HMRC give guidance on this kind of stuff - look for wholly and exclusively and repairs.

If HMRC asks questions (and high repair costs may trigger them) and you then give sensible answers but they disagree with them (e.g. you say £2,000 in business-related, they think £1,500 and you accept it) then you won't get penalties but you will have to pay the extra tax due plus interest.

If the answers lead HMRC to think that you were trying to pull a fast one (e.g. you were careless or worse) then you will have to pay penalties based on a percentage of the tax due (plus the extra tax and interest).