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Just thought id share this story with you.
Had a client aproach us asking for some help as they have been stung with a £95k+ bill from HMRC.
From what i can tell it appears that between 2002 and 2012 they had rental properties which were never declared to HMRC and got caught out when coutts informed them of a sale of one of the properties because of the likelyhood of Capital Gains Tax being owed.
As you can imagine they are abit frantic with it, because the bill has come to 95k already without any interest or penalties.
Now obviiously HMRC have drawn this figure out of thin air, some information the client has given them prior to seeking advice, and not taking in to account any claimable expenses such as mortgage interest, rent collection fees etc and have determined the liability soley on the income received.
The truth is, we can help them to a point, but HMRC are under no obligation to allow us to go back 10 years to file accounts with them to reduce their bill, at most maybe 6 years if lucky, but what a lot of people do not realise is there is a cut off period for when tax returns can be submitted for previous years, and sadly, the determination will have to be paid.
Its likely as with most rental properties that they ran at a loss for most of those years, and all that would be due is CGT on profits from selling the house less what they paid for it, less expenses, however its going to be very tricky to reduce the bill to somewhat a reasonable amount because of the length of time.
We will do our best for them and can reduce the bill quite a lot but unfortunately for them, our fees will also be quite heavy to try and sort out the mess.
There are a number of people who do have rental properties which they do not notify HMRC of, and in most cases get caught out when a sale of one of those properties occour, often people do not reaslise that banks will inform HMRC of any large amounts of cash deposited in to an account.
If it were me, id probably go in to hiding somewhere, i cant imagine how they must feel being hit with a £95k bill.
The thing is, they havent helped themselves at all, it appears as though they went to a meeting at HMRC without representation, and have admitted to things a decent accountant would otherwise advice to not comment on, which has only made our job more harder.
Had a client aproach us asking for some help as they have been stung with a £95k+ bill from HMRC.
From what i can tell it appears that between 2002 and 2012 they had rental properties which were never declared to HMRC and got caught out when coutts informed them of a sale of one of the properties because of the likelyhood of Capital Gains Tax being owed.
As you can imagine they are abit frantic with it, because the bill has come to 95k already without any interest or penalties.
Now obviiously HMRC have drawn this figure out of thin air, some information the client has given them prior to seeking advice, and not taking in to account any claimable expenses such as mortgage interest, rent collection fees etc and have determined the liability soley on the income received.
The truth is, we can help them to a point, but HMRC are under no obligation to allow us to go back 10 years to file accounts with them to reduce their bill, at most maybe 6 years if lucky, but what a lot of people do not realise is there is a cut off period for when tax returns can be submitted for previous years, and sadly, the determination will have to be paid.
Its likely as with most rental properties that they ran at a loss for most of those years, and all that would be due is CGT on profits from selling the house less what they paid for it, less expenses, however its going to be very tricky to reduce the bill to somewhat a reasonable amount because of the length of time.
We will do our best for them and can reduce the bill quite a lot but unfortunately for them, our fees will also be quite heavy to try and sort out the mess.
There are a number of people who do have rental properties which they do not notify HMRC of, and in most cases get caught out when a sale of one of those properties occour, often people do not reaslise that banks will inform HMRC of any large amounts of cash deposited in to an account.
If it were me, id probably go in to hiding somewhere, i cant imagine how they must feel being hit with a £95k bill.
The thing is, they havent helped themselves at all, it appears as though they went to a meeting at HMRC without representation, and have admitted to things a decent accountant would otherwise advice to not comment on, which has only made our job more harder.