Taxation on Property
Thomasl1
Registered Posts: 43 Regular contributor ⭐
Hiya guys, bit of a query.
A client has approached me regarding taxation on rental income. He has a number of properties so I have given advice on a number of issues regarding this (deductible expenses, etc). There is something I need to clarify. The client has had the property for a few years, however as he was making losses in the first couple of years, he assumed (wrongly) that he didn't need to complete a self assessment. With the varying interest rates, he has now made a substantial profit this year (well from Nov 08 onwards). He wants to know if its possible to offset losses from previous years against this years profit. However, as he has not completed SA's for the previous years, surely this isn't possible.
Any comments on this would be much appreciated.
Thanks
Steve
A client has approached me regarding taxation on rental income. He has a number of properties so I have given advice on a number of issues regarding this (deductible expenses, etc). There is something I need to clarify. The client has had the property for a few years, however as he was making losses in the first couple of years, he assumed (wrongly) that he didn't need to complete a self assessment. With the varying interest rates, he has now made a substantial profit this year (well from Nov 08 onwards). He wants to know if its possible to offset losses from previous years against this years profit. However, as he has not completed SA's for the previous years, surely this isn't possible.
Any comments on this would be much appreciated.
Thanks
Steve
0
Comments
-
Hi Thomas
You will have to advise HMR&C the correct date that the client started to let the properties. The client will then have to complete SA tax return for each of the missing years bringing forward losses as appropriate. This will then allow the offset for this year.
However, I had a situation last year where the client needed to submit more than 6 years returns and the revenue were happy with a spread sheet for the early years to confirm the losses bf.
Fortunately the client had retained all of his paperwork to enable a reconstruction.
Julia0 -
Hi Julia,
Many thanks for that, very helpful advice.
Would my client be liable for any penalties for not completing the SA returns? (I think there may be 3 in total).
Cheers
Steve0 -
Thomas,
If there is no liability to tax then you will be able to ask for the £100's to be reduced to nil and this is normally done automatically by HMR&c anyway.
Lets hope that this ends up being the case, since you had to advise on what could be claimed and when all other income is collated in a SA.
Mortgage repayments recorded as an expense when they include capital repayment as well as interest and other capital expenditure off set in the year suffered, springs to mind here!
Julia0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 325 NEW! Qualifications 2022
- 160 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 95 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 273 VAT
- 92 Software
- 274 Tax
- 138 Bookkeeping
- 7.2K General accounting discussion
- 202 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership