Taxation on Property

Thomasl1
Thomasl1 Registered Posts: 43 Regular contributor ⭐
in General accounting discussion
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

Comments

  • Poodle
    Poodle Registered Posts: 711 Epic contributor 🐘
    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.

    Julia
  • Thomasl1
    Thomasl1 Registered Posts: 43 Regular contributor ⭐
    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
    Steve
  • Poodle
    Poodle Registered Posts: 711 Epic contributor 🐘
    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!

    Julia

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