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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am trying to complete a let property disclosure and am stuck

Customer Question

I am trying to complete a let property disclosure and am stuck on how to work out tax due and the penalty I need to pay. Property was left to me for my sons who were too young and not in a position to take it on yet. I had to use my savings and borrow money to make it habitable, also adding a bathroom and central heating before anyone could live in it. I let it to someone I know who has lived there for 4 years with me paying maintenance costs, insurances and supplying white goods and some furniture.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Can you point me at the forms you are completing please. Is the one you are doing part of the Let Property Campaign? Can yoi give me a bit more detail about your disclosure, how many tax years are involved etc.
Customer: replied 1 year ago.

Hi, thanks for your reply. Yes it's the Let Property Campaign: disclosure form (DO2). I first let the property on the 1st September 2010 at £775 per calender month and the rent has remained the same.

Expert:  TonyTax replied 1 year ago.
Thanks.

Let me see if I can reach the section you are having trouble with. Which part is that?
Customer: replied 1 year ago.

It's the section " Letting income liabilities", what I need to put in each column and how I work it out. Then have to work out the penalty and put what percentage I think I should pay.

Expert:  TonyTax replied 1 year ago.

Did you submit tax returns for 2010/11, 2011/12, 2012/13 and 2013/14 without the rental income in them or were you not in the self-assessment system for those tax years? Did you approach HMRC before they found you?

Customer: replied 1 year ago.

No, I had a letter from HMRC giving me the chance to declare which I accepted so now have to fill in the form and pay by May. No tax returns submitted therefore and not in self assessment system although I presume I will be from once this is paid?

Expert:  TonyTax replied 1 year ago.
Thanks.

What is the deadline date for disclosure mentioned in the letter?
Customer: replied 1 year ago.

My deadline will be 12th May

Expert:  TonyTax replied 1 year ago.
Thanks.

Does the HMRC letter have a reference with the letters "AI" as part of it? Can you give me the jist of what the letter says?
Customer: replied 1 year ago.

Yes it does. Basically the letter thanks me for telling them I want to make a disclosure under the Let Property Campaign. It says to make the disclosure I have to go to www.gov.uk/let-propety-campaign and complete the online disclosure form. Disclosure and payment are then due.Gives me my reference numbers and their bank details for payment.

Expert:  TonyTax replied 1 year ago.
Thanks.

According to the top section of note 3.9 here, as HMRC wrote to you before you made a voluntary unprompted disclosure as signified by the letters "AI" in the reference, you should select 35% as your penalty.

I'm standing by if you need any more help. You don't have to rate my answer until you ready to so keep asking questions even if you get prompted by just answer to rate my answer.
Customer: replied 1 year ago.

Thanks.Where I am stuck though is,asI first said,in working out income, amount of tax payable and penalty due.

Expert:  TonyTax replied 1 year ago.
In the Letting Liabilities section, click on the ? next to "For information on how to calculate the tax you owe please click the help icon ?".

A new section will open and if you look at the third last paragraph you'll read "HMRC have produced a calculator that can be used to calculate the tax, interest and penalties due for the most recent 7 years".

Click on "calculator" and you'll be taken to a calculator where you select each tax year you need to produce a calculation for. You'll need all your income details for each tax year.

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