Had a new SA client in yesterday, one of many this month(!), going through asking him all the standard questions and he announces he has been renting out a property for several years now and never declared it. This is about my third client in the last two months whose in this situation.
Anyway, on questioning why this was only just coming to light now he said that his prev acctnt had said if he wasn't making a profit not to bother declaring it!! Not the advice I would have given!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Again - apologies as I am new to this - but I have been working through the Self Assessment book for the ICB qualification not because I want to offer this service particularly, but I thought it would be good knowledge to have as it may 'tie things together' a bit more.
So (checking my understanding !), would your advice be to declare it as even if its made a loss, and therefore should be entered as nil in the tax computation, in the self assessment book it says "any losses can be carried forward to offset against any future profits from property" - which I guess would be rather difficult to do if you didn't declare that property!
Would be interested in knowing who the previous accountant was!!
Anyway, with Tax Returns/Self Assessment, declaring everything is the best way, even if you think its isn't worth it.
With regards to the properties, I would get some 3rd party advice based on a no names query about how to go about the previous years losses.
Yes penalties are payable for incorrect Tax Returns, but at least your safe in the knowledge that no tax is due on the losses (if the figures are correct) might be worth paying the penalties as the losses may cover any profits and tax payable in the future. Who knows, you might be let off for dobbing in the dodgy accountant if you have proof of anything.
When it comes to declaring you have to think how the Inland Revenue think. For example, last year you received £20 in bank interest. This year you received £150 in bank interest. That's a hell of a jump for one year and your earnings don't support that sort of increase. If I saw that my first question would be "why has your bank interest jumped £130?", so for example you had a win on the horse, put that in the additional information box that you won £X amount and this accounts for the increase in bank interest.
You have to pre-empt there questions so you give them the answer first. Makes life a little easier.
Yes Liz, you are right, you can carry the losses forward until you make a profit and then offset them.
Merlion, I agree, more info is better than less info, saves an aspect enquiry that can easily escalate out of control. Obv I will have to sort out this rental income as now I know about it to do nothing would mean I'd have to report him under MLR for tax evasion, which seems rather unfair given that he was following advice. Will be interesting to see how this pans out as it appears the problem stems back further than the year you are currently allowed to submit amendments for!
Am awaiting paperwork to see the extent of the problem.
Forgetting you rent out a house (or not knowing it's taxable) seems to be a very common problem, well amongst my clients anyway!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
its also interesting to note that as a self employed person, rental income cannot be added together with the self employed income, so if you make a loss, you then cannot offset that loss for that year on your other income, if that all makes sense!!
Yes that is entirely unfair in my opinion. I also believe that if you sell the property before using up all your carried forward loss then you lose the balance of it. Why you can't have the option to offset against other income, whether employed or self employed I do not know!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
!), would your advice be to declare it as even if its made a loss, and therefore should be entered as nil in the tax computation, in the self assessment book it says "any losses can be carried forward to offset against any future profits from property" - which I guess would be rather difficult to do if you didn't declare that property! 
