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Sam
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Category: Tax
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Hi. On September 2010 my mum bought a holiday chalet, in

Resolved Question:

Hi.

On September 2010 my mum bought a holiday chalet, in november that year she got ill (she is 88), in March 2011 we decided it was best to rent it out as a holiday furnished property through an agent.

I was told that if the income minus the agent fees was £2.500 or less we didn`t need to declare it to the tax office, the income for that year was £2324.

Since then we have been told different and that we should have declared it, so I contacted the tax office in late March of this year. They said that we need to make a disclosure under the let property campaign. I gave them some details and we were send out a letter directing us to a disclosure form to be filled out online.

After doing some calcuating I made out that net profit for 2011 was £248.72 and for 2012 it was £343.18.
Iam now trying to work out the income tax, interest and penalties using the 5 year calcuator online but after putting in the profits it comes back as 3% interestt but £0.00 for tax and penalties. Are my doing something wrong there?
As my mum is 88 she dosen`t of course pay national insurance.

As this is a furnished holiday let, do I need to work out the capital allowance as well?

Sorry this is all new to me, so any help would be appreciated.
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question. I am Sam and am one of the Uk tax experts here on Just Answer.

Can you advise what other income your Mum had for
1) 2011/2012
2) 2012/2013

Then I can work out the tax for you - and the interest due
The penalties will be up to HMRC - have they agreed a % of penalty under the disclosure let property campaign?

Thanks

Sam
Customer: replied 3 years ago.

Hi Sam,


 


My mum gets an Irish state pension which works out at around £9000 a year (depending on the exchange rate)


 


She also gets attendance allowance of £54.45 a week here in the UK which I looked up is not taxable.


 


I have just noticed that they only allow me to do a disclosure for 2011/2012


For 2012/2013 and 2013/2014 years have to be declared through self assessment. I assume I`ll get penalties there as well.?


 


On the penality under the disclosure you are given options


 


Depending why you didn`t tell them from the beginning.


Its says if You deliberately failed to tell HMRC you had started letting out a property and needed to make a return its 20%


You started letting out a property, and did not tell HMRC that you
needed to make a return, but you weren't deliberately trying to
keep the information from HMRC its 10%


 


So I assume the penalty is 10% as I didn`t try to hide it, I just didn`t understand it as I was getting different answers from everyone but should have contacted them sooner.


 


Thanks


 

Expert:  Sam replied 3 years ago.
Hi Martin


Thanks for your response and the additional information

For the current year - Mums pension (you are right Attendance allowance is not a taxable income) and the net rental income is less then her personal allowances so there will be no tax liability.
For the earlier years, Mums pension would have been a little less, and this together with the net rental income position would appear is still going to be below the taxable limits (as the age related allowances are £10,660 and prior to that were £10,500) so she should still have NIL tax to pay,

If the disclosure is just making a charge of 10% penalty and 3% interest - if there is no tax liability (which certainly seems to be the case) then there will be no additional charges to pay

The only charges to consider are for the years that HMRC state self assessment returns must be completed (as the disclosure rate applies only to 2011/2012)
For 2012/2013 there will be a £100 penalty for the fact the tax return is late - so it seems the only out of pocket money Mum will have is £100 for each year the tax returns were late.
As it would appear that 2010/2011 also will bear no liability - so again a £100 penalty for the late return.
So a total of £200 in late tax return charges.

If you want me to look at 2010/2011 and 2012/2013 more closely then I would need the pensions for those years and also when Mum became 65 - to establish when the age related allowances applied.

Do feel free to ask any follow up questions - and do come back to Just Answer when you have the self assessment tax returns to complete and require any assistance. You can always ask for me Sam Tax in your new post - if you would prefer me to help.

In the meantime if you could rate the level of service I have provided (or press accept) it would be appreciated, as this ensures I am credited for my time.

Thanks

Sam

Customer: replied 3 years ago.

Hi Sam.


 


After talking to the let property campaign and explaining what you wrote I was told there was no need to return the disclosure form, so its ends there.


 


I then got on to the tax office about the self assessment, the person asked for my mums national insurance number but it seems the number is XXXXX in their system.


When my mum came to the UK she was already pension age so she wasen`t given a NI number as she didn`t work but when she applied for the attendance allowance a number had to be made up for her but this number didn`t come up on the tax office system.


The lady then told me as she is not on the system she dosen`t have to do a tax return.


 


Is this correct?


 


Thanks.

Expert:  Sam replied 3 years ago.
Hi Martin

No that's not correct! All she needs to do is register for self assessment and they should have arranged this over the telephone - but you can either
1) Ring the self assessment helpline to have you Mum set up for self assessment from 2012/2013 OR ideally from Sept 2010 Details as follows
8.00 am to 8.00 pm, Monday to Friday
8.00 am to 4.00 pm Saturday
Closed Sundays, Christmas Day, Boxing Day and New Year's Day
Telephone number 0300(NNN) NNN-NNNN

OR
2) Register her for self assessment online (or print off the form to post to HMRC)
Link here for you to do this
http://www.hmrc.gov.uk/sa/register.htm

Either position will then result in a 10 digit unique taxpayer reference being issued, and the tax returns that require completing.

Thanks

Sam


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