Alexander’s & Co Chartered Accountants
18th March 2015
18th March 2015
Alex loves business and gives regular presentations to those wanting to learn about the accountancy and tax part of running their own business. He helps break down the barriers that people face in running their own business and how to maximise their earnings. The biggest enjoyment that Alex gets from his role as an accountant is to work with people from all walks of life and most importantly helping them with their money. Alex’s specialism is in dealing with tax issues relating to properties, where he regularly advises clients with a property portfolio as small as one buy-to-let property to large commercial and residential property developers.
I have been receiving rental income from a property over the last few years and am unsure of what I need to do with HMRC. I know that I owe tax but I don’t know how the process works, especially given that I've been getting this income for a few years. Can you advise?
For many, buy-to-let properties looks an attractive income investment in a time of low rates and stock market volatility, but what are the tax implication for those that have not declared this income?
If you receive rental income from a property, this needs to be disclosed to HMRC, in most instances by filing a self-assessment tax return. When you start receiving rental income, you must inform HMRC, who will then issue you to file a tax return.
We have dealt with many clients over the years, who were in a similar position to you. In most cases HMRC will fine and charge interest on any overdue tax owed, until you catch up with overdue tax returns. There is however another option available, which a lot of people are not aware of, known as the Let Property Campaign.
The Let Property Campaign is designed to give you the opportunity to bring your tax affairs up to date if you have been letting out a residential property. By going down the Let Property Campaign route, you are likely to get the best possible terms from HMRC to pay the tax that you owe, given that you have made a voluntary disclosure.
Note: this opportunity is only available to individuals and not to companies or trusts receiving rental income from residential properties or if you receive rent from commercial properties.
My advice is to contact HMRC and make the voluntary disclosure before they track you down. It is not unusual for the HMRC to contact individuals about tax owed on their rental income. A common way that HMRC aim to clamp down on undeclared income of this type is by circulating a demand to the letting agents up and down the country for them to provide a list of all their landlords and the gross rents received, they tally this up with the information at HMRC and contact you if there are any discrepancies.
If you have an accounting question for Alex please e-mail him directly he will be happy to assist you, alternatively Alexander’s & Co offer an initial free consultation please contact them to find out more.
24A Aldermans Hill, Palmers Green, London N13 4PN
Tel: 020 8882 6611 Fax: 020 8882 6621
Disclaimer: The information provided in this article should not be construed as legal advice and the information is offered for information purposes only. You should always seek advice from an appropriately qualified accountant on any specific accountancy enquiry.