Can anyone give me a little guidance / reassurance concerning a client of mine, who has been renting out a residential property since 2008 but is only now getting her tax affairs in order.
I've worked out the net income for each year from 2008-9 onwards. I need to check two things:-
1/ Council tax incurred when the property is empty is an allowable expense. Does this also apply to utility bills? During the time it was empty, the property was being renovated.
2/ When charging for my work, should I treat the cost as an accrual charged in these earlier years?
Mark99 wrote:1/ Council tax incurred when the property is empty is an allowable expense. Does this also apply to utility bills? During the time it was empty, the property was being renovated.
The council should have been informed that the property was being renovated so CT would have been reduced / non payable during those periods.
As they did not do that then you may find this very short introduction to property rental expenses from Which quite useful as it also covers the other questions that you are propbably pondering :
2/ When charging for my work, should I treat the cost as an accrual charged in these earlier years?
Its definitely the way that I would go
There will be fines / interest / penalties / surcharges but I'm sure that you're client is already aware of that.
As with many in this position I'm sure that they will have been oblivious to how much they are likely to have been costing themselves by not declaring the income which would probably be next to nothing if they geared the loan properly combined with other expenses such as your fee's.
I'm assuming yet another case of clients making pennies and completely missing the pile of £10 notes blowing out of the window!
All the best,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Don't forget that travel expenses for visiting the property, bank, council, anything associated with the property can be claimed for if incurred by the owner.
-- Edited by Merlion ABS on Friday 23rd of August 2013 11:20:14 PM
Thanks for your comments and advice. The landlady in question did get a reduction in council tax during the time the property was unoccupied, and I think I have correctly taken into account the revenue expenses incurred on the property.
Yes, there was quite a bit charged in terms of penalties and interest, but I think it's pretty well settled now, in that I have made a full declaration, and she has made full payment of everything due.
