Lodgers (Rent a Room)

Psyche

Hello all,
I have a new client who has been renting out rooms in her house, which she jointly owns with her brother, for the past five years or so. She has never declared the property income and it exceeds the rent-a-room exemption. So she's in a bit of a spot it seems.

I have never dealt with property income in a shared residence and can't find much guidance online from HMRC. Does anyone have any guidelines for apportioning the costs -- utilities (these are included in the lodgers' rent), mortgage interest, etc -- for the portion of the home that is rented out? The lodgers have their own rooms as well as access to the common areas. Any advice is appreciated.

Also, anyone know how punitive HMRC is likely to be? It never occurred to the client that getting some money toward her mortgage was taxable.

Thanks!