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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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HMRC Tax Personal Investigation

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HMRC Tax Personal Investigation

Mr A has owned a second property for 20 years. For some years on and off Mr A let the property out on shorthold tenancy for periods of upto 1 year. Mr A failed to declare this income to HMRC.

HMRC has contacted Mr A recently to bring his tax affairs up to date.

Mr A doesn't have all the records and doesn't remember exactly when and how much rental he got.

How far should Mr A go back?

What evidence to HMRC require? Bank statements?

How far does HMRC normally go back?

Hi Thanks for your question and asking fo me Mr A has to make the full declaration back from when the first rental began (which could be as far back as the 20 years of ownership) HMRC initially will accept the figures disclosed (but may ask for the evidence to back this up) but Mr A would certainly need bank statements to create the income position - along with any tenancy agreements.The bank statements would also help work out what expenses were paid out - which can be offset against the rental income as would any loan interest certificates for interest paid - if this property was purchased with a loan/mortgage.The main issue here is that the banks/lenders will not hold records back for the last 20 years, but maybe 3-5 at most.It may be it would be worth engaging a local accountant to work out the estimated position each year and liaise with HMRC for you, as they often can manage a clients expectations and negotiate with HMRC through probable facts better than an individual may be able to. Do let me know if I can be of any further assistance Thanks Sam HMRC normally go back to when an undisclosed source began -
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