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Mr-Novice
21-02-2007, 20:41 PM
Out of curiosity

What will happen to a landlord if they do not declare their letting income to the inland revenue?

Can they be fined £5000 and sent to prison?

To pay the inland revenue and money I owe to others for the deposit I will need to take a personal loan out from the bank. Is the personal loan taken out tax free and be considered as my expenses.

Paragon
21-02-2007, 21:09 PM
The Inland Revenue will just want their money plus interests. Lester Piggott was an exception.

Mr-Novice
21-02-2007, 21:24 PM
The Inland Revenue will just want their money plus interests. Lester Piggott was an exception.
Thanks for the information Paragon

Paragon do you know how much interest the Inland Revenue will charge?
What is the story for Lester Piggott?

By letting out a property does not mean that the landlord is making a profit. Some people like myself who require the mortgage to be exempt and counted as an expense for tax purposes require the money so that our property does not get repossessed. The inland revenue just cares about tax money and can/will not assess the situation irrespective. We will also lose our deposits in the process.

Paragon
21-02-2007, 21:48 PM
BBC News story on Piggott

http://news.bbc.co.uk/onthisday/hi/dates/stories/october/23/newsid_3755000/3755282.stm

stephenp
22-02-2007, 09:54 AM
the Inland revenue are cracking down on buy to let income, it has been in the news lately that they are linking into certain databases to get information.

Mr-Novice
22-02-2007, 10:38 AM
Thanks for the information guys.

I will need to declare my taxes to the inland revenue to be on the safe side of the law. Bread and water for lunch now :(

Tax Accountant
24-02-2007, 15:59 PM
Thanks for the information guys.

I will need to declare my taxes to the inland revenue to be on the safe side of the law. Bread and water for lunch now :(

If you can't hack the consequences of buying investment properties (income may not be great but capital appreciation generally outweighs any negatives), it is best to stay within the confines of four walls of your own home.

Ramnik

Tristan
24-02-2007, 18:36 PM
If you don't pay the tax you owe HMRC will want the tax, plus interest (currently around 7.5%).

If you have been negligent and not paid the tax (i.e. didn't know it was taxable, didn't take advice, etc) then a penalty can also be imposed. This could be up to 100% of the tax due, but is often lower depending on circumstances (such as the size and seriousness of the negligence, how much you co-operate, whether you come to them or they find you). It might be around 25%-35%.

If you are purposely avoiding the tax then this might be considered fraud not negligence, which is a criminal offence. Technically you could end up in prison but this is unlikly.

In extreme circumstances, if you continue to avoid filing your tax returns, a penalty of £60 per day until the return is filed can be imposed.

I suggest you sort the position out!

Tristan

Poppy
25-02-2007, 14:50 PM
I used to have a limited company. My accountant once calculated the incorrect amount of national insurance to pay (too low by approx £100). The then Inland Revenue somehow very quickly picked up on this, paid me a visit and went through the books. I paid the missing difference, a small penalty and interest. I made sure that accountant paid the penalty and interest charged by reducing the fee accordingly. Silly accountant. He didn't slip up again thankfully.

steveandbee
27-02-2007, 11:53 AM
the Inland revenue are cracking down on buy to let income, it has been in the news lately that they are linking into certain databases to get information.

Surely the Agency (for those with agency at least) should inform Inland Revenue their clients as a rule. Landlord would think twice before trying to aviod the tax.

Poppy
27-02-2007, 16:24 PM
Is that your opinion, or what you think the law is?

Tax Accountant
03-03-2007, 12:01 PM
Quote from Steve and Bee: ''Surely the Agency (for those with agency at least) should inform Inland Revenue their clients as a rule. Landlord would think twice before trying to aviod the tax.''

Quote from Poppy: ''Is that your opinion, or what you think the law is?''


Poppy, as far as I am aware, yes, it is a law that all Estate Agents are required to file an annual list of all landlords they act for and show the rents collected on behalf of each one of them.

Ramnik

Taxation Solutions
08-03-2007, 21:26 PM
The landlord has a legal obligation to declare the rental income to HMRC. Failure to do so will result in fines and penalties, which can amount to more than the tax payable!! So why take the risk.

Prison is the last resort.

HMRC are cracking down on landlords so beware. Also when the BTL property is sold the solicitor will send a return to the SDLT tax office so at some stage HMRC will get you!!

sober
09-03-2007, 01:55 AM
Thanks for the information Paragon

Paragon do you know how much interest the Inland Revenue will charge?
What is the story for Lester Piggott?

By letting out a property does not mean that the landlord is making a profit. Some people like myself who require the mortgage to be exempt and counted as an expense for tax purposes require the money so that our property does not get repossessed. The inland revenue just cares about tax money and can/will not assess the situation irrespective. We will also lose our deposits in the process.

That is right

By letting property does not mean that one is always making a profit. Tax is due on Net profit from rental income after deducting interest costs, repair costs, wear and trear, agents costs etc. Just because you have not declared rental income does not automatically incur penalties if you have not done your tax return especially if you were not asked to do so; penalties and interest are charged if you have not declared "profits" from rental income whether asked or not. Also depends if you have other taxable income.

(from what I have seen) One can make accounts for each previous years, seek advise from a professional accoutant, to present to inland revenue, they can be more understanding than you might fear, especially if the net profits are small.

If one has to get a personal loan to pay inland revenue any tax or fines that is not allowed as expense. Personal loan to return deposits etc could qualify for relief; only interest would count as cost.

Regards
Sober

Tax Accountant
10-03-2007, 17:55 PM
They are required to file an annual list if asked - as far as I know there is no obligation to do so without being asked.

We have property managed in Nottingham - the agent has been asked to provide a list for last tax year and has charged us (I think) £35 **PER HOUSE ** for the privelege.

I am not aware of any basis on which the Agent is able to charge you a fee for completing a list required by H M Revenue & Customs.

Ramnik

Beeber
11-03-2007, 22:01 PM
It's perhaps a fee that is covered under the terms and conditions of the contract between landlords and letting agents.

When I canvassed local letting agents for their T & C's and breakdown of charges, most just charged fees for standard services for drawing up the inventory & AST, for example.

Among the half dozen I received a breakdown of their charges, one charged a fee for providing a report for tax purposes.

Tax Accountant
11-03-2007, 23:08 PM
It's perhaps a fee that is covered under the terms and conditions of the contract between landlords and letting agents.

When I canvassed local letting agents for their T & C's and breakdown of charges, most just charged fees for standard services for drawing up the inventory & AST, for example.

Among the half dozen I received a breakdown of their charges, one charged a fee for providing a report for tax purposes.

I think the report for tax purposes mentioned by you in the last paragraph most probably referred to giving you the actual rental income and deductions report to you for a tax year to assist you in completing your self-assessment tax return.

This is not the same as completing the Tax Office form for all landlords for whom they acted.

Ramnik