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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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In my self assessment tax return I have been stating my rental

Customer Question

In my self assessment tax return I have been stating my rental income on the basis of a calendar year, but all other incomes as per financial year. Unfortunately, I was advised as such wrongly by a tax accountant. I am thinking to change it from next year and therefore ask the Inland Revenue to advise me accordingly. This would mean that for the first year after change the rental income would be only for three/four months covering January - March/April. Would the Inland Revebnue accept it?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. How many years have you been declaring the income on a calendar year basis?
Customer: replied 1 year ago.
can't remember may be more than 5 years
Expert:  TonyTax replied 1 year ago.
Thanks.
Leave this with me while I draft my answer.
Customer: replied 1 year ago.
only the rental imncome as I saidWill you be returning soon?
Expert:  TonyTax replied 1 year ago.
I'm writing my answer now. These things take time.
Customer: replied 1 year ago.
OK
Expert:  TonyTax replied 1 year ago.
Hi again.
Whoever told you to disclose your rental income the way you have shouldn't be allowed to work in tax.
You could try asking them but I very much doubt that HMRC will allow you to disclose just three months three months rent, though I cannot see how you arrive at that calculation. By my reckoning, you would disclose January 2014 to December 2014 in your 2015 tax return using the incorrect method. Why would you only disclose three months instead of 15 months in the next tax return to put yourself on the right basis?
If you have the records, you might rework the figures to a tax year basis. There probably isn't much difference between the two methods so I'd be inclined to disclose 15 months in the next tax return you complete and then move to a 6 April to 5 April basis. There would probably be no point in contacting HMRC to amend the earlier years unless you have the records to do your rental accounts on a tax year basis.
I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thank you. Would the HMRC question the 15 months disclosure? How do they react to mistakes which do not conceal any income?
Expert:  TonyTax replied 1 year ago.
HMRC wouldn't necessarily notice that you have declared 15 months rent and expenses. Rental profits can vary significantly from year to year. If HMRC do raise questions which would be bad luck for you, that would be the time to come clean. You could say that you were out of time to amend the really old returns so you thought the method you used was the best way to straighten things out once and for all.
As I said, there probably isn't much in it between the calendar year basis and the tax year basis and as you said yourself, you won't have not declared all your income. I'd just try to get yourself on the correct basis as soon as possible.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15846
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thanks very much. That does help.
Expert:  TonyTax replied 1 year ago.
Thanks and good luck.

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