Renting out a house but not told the taxman.......

Lyndon

I was talking to an aquaintance about the house they have owned and rented out for the past three years and it came up in conversation that they have never declared the income (very small after the mortgage interest payments).
I have convinced them that it would be in their interests to go "legit" sooner rather than later but they are worried about how much the fines will be. Any ideas on the best way for them to approach HMRC and what this will cost?:crying:

JodieR

Hello

I've not had to do this before but would imagine that the best way to go about it is to prepare all the tax returns & send them together with a covering letter appologising for the delay but explaining that they didn't realise they were meant to be completed.

As far as fines go, they're looking at:-
£100 late filing penalty for each late return (although this will be reduced to the amount of outstanding tax if this is under £100)
Surcharges and interest will no doubt be applied at the currect rates - i don't know how easy it is to appeal against surcharges.
There are other penalties which could be imposed but I don't think that HMRC will be that mean in this case.
If this was a business they would also receive a £100 penalty for failure to notify HMRC of trading, but this doesn't apply to rental income.

Lyndon

Thanks Jodie - much as I thought but always nice to have confirmation.