Hi everyone, I would be very grateful if you could help me:
I have husband and wife client's who I am preparing a first tax return. They have done the previous years return (2010/11)themselves, but I don't think their figures are correct for their property income and expenses.
The property made a loss that year as they had a lot of expenditure for dry rot & other issues, but they also made an error and overstated the expenses resulting in too much loss carried forward than should have been. I have last year's books and records so I can see that the problem was that they had included the rent received in both rents received AND rents paid!
My question is what do I do? They have not underpaid any tax last year, but I know that the figure I will have to but in box 39 will be incorrect if I use the figure from last year's return and they have made a profit on the property this year so it will obviously affect their tax liability this year. Should I put the true loss on the return? Will I need to write to HMRC and explain?
Hi Cass, put the corrected figure in (without the rents paid error) and telephone HMRC asking to change 2011. They may ask you to confirm it in writing so get a contact name and address.
As you say, there is no tax lost so it shouldn't be a problem.
