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Senior Partner
Senior Partner, Solicitor
Category: Law
Satisfied Customers: 13325
Experience:  Solicitor with more than 30 years experience
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What action can HMRC take if somebody declares unpaid property

Resolved Question:

What action can HMRC take if somebody declares unpaid property rental income tax for the past 15 years under the current Let Property Campaign and would they take criminal proceedings due to the length of time involved? Finally what course of action should the person take, if any, before contacting HMRC?
Submitted: 3 years ago.
Category: Law
Expert:  Senior Partner replied 3 years ago.
If you read the published information , if a full disclosure is made then HMRC can accept it in which case they will make a deal of repayment of the tax and that should be the end of it. If they refuse it because they do not accept it is genuine or if any false disclosure is made they can then impose higher penalties and even prosecute.

The basic principle is that if you make disclosure under the scheme then they will not take any criminal action. If you do not and then are found out they will prosecute.

As long as he provides a reasonable and sensible estimate of the figures I am sure they will accept it.
Customer: replied 3 years ago.


Thank you for your reply.


However, as asked, what course of action should he take before contacting HMRC?


 


Also how should he contact them? - by telephone, if so what telephone number should he use, or in person at a local branch of a HMRC office

Expert:  Senior Partner replied 3 years ago.
he should fill in a notification form . See here:
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=WL35xHwTHLY&formId=7408?WT.mc_id=govuk_letproperty2

Or telephone 03000 514 479

Once he has contacted them he will have 3 months to calculate his rental income and pay the tax or agree with them a payment schedule

He should work out a best as possible the net income and the tax payable. If necessary get local tax accountant to help him.
Customer: replied 3 years ago.


What is he allowed to include in the calculation of net income, apart from rental payments, and does tax payable have to take into account personal income tax threshholds applicable during the 15 year period, i.e. is it taxable at 20% and/or 40%

Expert:  Senior Partner replied 3 years ago.
Rental income is taxable as part of overall income so the rate depends on total income for the year and yes unused personal allowances can be offset. The calculation of taxable profit depends upon authorised deductions. you can find out what is authorised on the hmrc website - for example mortgage interest may be allowable but capital is not but there are allowances. If you do not know how to do it you would be better to use an accountant - it is likely to save tax at the end of the day.

You can find some basic info here:

https://www.gov.uk/renting-out-a-property/paying-tax
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