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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4973
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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There, can you tell me, assuming that you have all the paperwork

Resolved Question:

Hi there, can you tell me, assuming that you have all the paperwork in order, would the taxman be interested in what you have done with funds that you are declaring to have to pay income tax on? And would it make a difference if the filing was also filed 3 months late, and therefore incurring a penalty?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
.. if there were a good reason given for the lateness in filing and willingness to pay the full amount of tax and penalties owing promptly? Thanks
Expert: replied 1 year ago.
Thank you for your question. As a general rule, under self assessment, you are expected to make full disclosure of your income from all sources and report it on your tax return.The taxman is not that interested in how you have disposed of that income provided you have paid the correct tax on it in the first place, unless there is an enquiry into one's tax affairs.As you have mentioned, late filing of tax return would give rise to a fixed penalty.The taxman would normally instigate an enquiry if there is not full disclosure of income.Lateness in filing a tax return alone is not a reason for starting an enquiry. I hope this is helpful and answers your question.If you have any other questions, please ask me before you rate my service – I’ll be happy to respond. and other Tax Specialists are ready to help you
Expert: replied 1 year ago.
I thank you for accepting my answer. best wishes
Customer: replied 1 year ago.
Hi there again, thank you again for your earlier answer.I have a further question which is related but only just come to light.I have Power of Attorney for my elderly mother, who I moved into my house to care for three years ago due to her ill health. She was previously living in a flat which she had bought in 2010 for £270,000. Because I have been so busy with working full- time and being preoccupied with her throughout my spare time, I was finally able to put her flat on the market for her last year and when it sold in March 2015 she insisted on gifting the proceeds to me to show her gratitude for caring for her and to be able to use for making her life as comfortable as possible till the end of her days. She wrote and signed a note to confirm this.Only today I happened to be talking to a bank clerk, making sure I had my funds in place to be able to pay my tax bill and late penalties as previously discussed with you in my last question, and she asked me if I had declared the other money which was from the sale of mum's flat, and whether I had filed a tax return to pay tax on it. It never occurred to me that I should declare this money because I assumed this came under the Inheritance tax issue, because it is money originating from my mum's only property - the paperwork from the solicitors would back this up. So I assumed that if she were to die then I would inform the tax man to show when the funds from the sale of her property arrived into my account and he could work out if any Inheritance tax was due, depending on how long she had lived since the sale. The amount in question is £336,000 and she has no other assets to her name, so the Inheritance Tax due would be small. But I am now worried that suddenly the question of Income Tax has arisen, on my part because the sale proceeds went into my name at her request? I have obviously missed the deadline for this as well. But if I had known, then I simply would have left the monies in her name because she has no other assets and is not earning a wage at the age of 91.Is the clerk correct? She also said that if the funds had stayed in mum's name, mum should have filed a tax return in order to declare the monies she had made from the sale of her only property? I thought it was only if you had more than one property that tax or CGT would be due on proceeds from a sale? I am so confused!This has also made me think of an amount of money that she gave me back in 2013 - she wanted to help me to be able to buy and so secure my Share Options. At that time I felt quite bad accepting such a generous offer from her... it was £158,000, so she said I could consider it as a loan if it made me feel better! She would never want to ask me for this money, but would it be a good idea to immediately send this amount back into her name from the proceeds that she has in effect gifted to me from selling her property? ( and thus lower the total amount in my name for any tax liability?) If so, would the fact that I haven't repaid this loan until now matter, as long as we had a loan note in writing for a three year term for instance?We obviously have a joint account because she is unable to manage her day to day finances... she is partially sighted, has a Blue Disability Badge and has late onset of dementia, therefore Power of Attorney was necessary on my part.In the meantime, my accountant is still working out the calculations on my tax bill as a result of the share and Long Term Incentive Plan Issue two years ago. The total owed is going to be in the region of £500,000 because I was lucky that the shares sold very well - they paid out at just over £1million. It's been quite a complicated legislative calculation because part of the incentive plans were exercised in Autumn of 2013, even though I did not receive any monies until late summer of 2014, so I should have filed a return for that year of 2013 - 2014 as well, which I wasnt aware of.I'm hoping that the Tax Office will accept my accountant's calculation and agree on the amount of tax and penalties that I owe, and be happy that I have declared my share/LTIP proceeds, albeit late, but now I am worried that they might want to check the account that my payment will be coming from, and see this extra amount from the sale of mum's flat.I had mentioned that I had these monies from mum's flat sale in an email to my accountant a couple of weeks ago, but he did not respond or ask for any details on this so I assumed that this was not an issue. I should have perhaps persisted on this point.He has not yet registered me... I thought he had but he had been rather quiet last week, and finally got back to me on Friday to say that it had taken him longer to get the calculations worked out, and so he would rather not rush this. He is awaiting my instruction to allow him to proceed with the registration.Apologies for such long-winded questions Kind regards!
Expert: replied 1 year ago.
Thank you for your question..In my view this is a separate question and you should put it as a fresh question under Just Answer rules. many thanks

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