Query re Non Res Landlord & Tax

Vonni

I have recently taken on new clients husband & wife; non resident with income from letting a UK property; sharing profits/losses 50-50.

The Revenue were informed of their status and authorised the letting agent to pay the rent without deduction for tax.

In addition the wife was in receipt of income as a Crown Servant - paid without deduction of tax under ITEPA Section 28(5).

Both have recently returned to the UK but the wife has never been asked to complete a tax return hence has no UTR number - even though she had a professional adviser who charged her and her husband for filing UK SA returns.

Initially I have asked her to complete a 64-8 so that I can act as her agent.

Losses have accumulated in previous tax years which I now want to offset against her share of profits for 08/09 but I am uncertain if this will cause a problem as the Revenue know nothing of these accumulated losses ?

Additionally I have been advised that I need to put her income from employment on the SA return which I cannot concur with as it is non taxable under S28(5) - surely if I include this on the return when filing on line using the Revenue software it will calcuate that tax is payable?

Her husband's 50% share of the rental income is straightforward as his employment falls under UK tax law and consequently a UTR number exists and SA returns have always been filed.

Any assistance or advice would be appreciated.

Thanks

deanshepherd

I would be inclined to claim the losses regardless. If HMRC question them then you can always submit prior returns under the error or mistake provisions.

If HMRC were indeed notified of her rental property (for the purposes of the non-resident landlord scheme) and chose not to issue a tax return (which does happen) then that evidence will be handy in the event of any enquiry by them.

If her income as a crown servant is covered by HMRC's exempting order then it does not need to go on her tax return. Presumably as she is now back in the UK then that income will need to be declared from now on.