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I had a call from an old School friend who knew I was a Landlord and wanted some advice ??
The situation is he owns a house which was a family home but needed to move for a new Job
He could not sell the house So he got permission from his Lender to rent the property and permissions was granted a number of years ago
The property has been rented since ?
My friend never got around to informing HMRC But a letter arrived from HMRC to his home asking if he was a Landlord
I met with him today and advised that he needs to come clean with HMRC and declare the income
He also knew nothing about S24 which will impact his Tax Affairs
My question has to be what percentage of our sector is in this position
After the impact of S24 he will make No Profit so he has decided to sell
He asked me why was he caught ??
I think it was because he was using a Managing Agent who have informed HMRC
It is good to see HMRC doing its job
Has anyone else had this experience what are the penalties HMRC can impose on this sort of thing
Learn Change and Adapt ?????
Letting Agents are obliged to report all their customers (landlords) to HMRC.
I suspect that is what happened here.
Penalty likely to be 70% of Tax due as Hmrc would deem it deliberate but not concealed
Thanks Sean hope you are well
Ouch, that will eat int the profits from the sale - Don't suppose the Tax penalty is CGT deductable, no perhaps not, only a thought ;-)
Just the beginning imho.Further details here:HMRC "Let Property" campaign extended for 4 years! Exclusive Results- HMRC Let Property Campaign
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
spot on And I think its a great thing too
You and I both pay tax so why not them?
I may soon be in a similar position. As far as I was aware there is no mortgage interest relief on a domestic mortgage, tax is payable on rental income minus expenses. Have I misunderstood this? Does S24 give relief on domestic mortgages?
If you let a previous residence with a mortgage then the tax treatment is the same as if it was a BTL mortgage for the period it is let.
Thanks EssexLL, this Accidental Landlord option is looking better all the time. As a BRT I anticipated paying 20% tax on rental income if I couldn't sell but it seems this could be lower than 5%. I'll speak to an accountant!