Hi I have a client who has been self-employed for years and started renting out their house in 2010, they have not declared this on the previous 2 years tax returns 10/11 and 11/12.
Is it possible to include it all in this years return 2012/13 or do they have to write to HMRC to tell them about it and send the amendment of the tax return.
Does anyone have any experience of this? and will they face a fine? the is very little profit on the rental property.
You should do amended returns for each of the tax years in question. This will restart the enquiry period allowed, but HMRC rarely bother. If there is additional tax to pay, there will be surcharges and interest. If its a paper exercise (most people make losses on rental property), then there are no penalties.
I often have to do amended returns as I keep discovering things client "forget" to tell me about. The excuses tend to be HMRC already know so I didn't think I had to tell you too or I already paid tax on it or I lost money it!".................. Some amended returns produce tax rebates.
Brilliant, thank you for your help. Just one question....what do you mean by 'if it's a paper exercise'? do you mean if a loss is made that there are no penalties? or if it is a paper return that there are no penalties?
