Can someone kindly confirm if this is correct for me please before I advise the client? The penalties for not submitting a tax return are approximately £1600 a year (no tax due as a profit wasn't made) but they didn't declare an income from a rental property dating back to 2006.
Penalties are only due if HMRC actually notified your client that a tax return was due and they subsequently did not not submit it. That may not stop HMRC issuing them, but it is grounds for a appeal. There may be a penalty for not notifing HMRC within the official deadline, based on any tax due, but from what you say - there may not be one. The only problem is when you do get the tax returns, I think you will have only 3 months to complete and submit them, before the penalties may start. It's late and I am going by my memory not very simple penalty system And it's "catches".......
Anyone - Please, feel free to correct me
-- Edited by YLB-HO on Thursday 3rd of September 2015 12:36:56 AM
Yep, it's £1600 for each return not submitted, split up as follows £100 after deadline £10 per day after 3 months to a max of £900 and £300 after 6 months
However it might be worth be worth having a read of this and making a voluntary declaration. With them not being liable for tax there could be a lot less to pay
I had a client in this position, and we made a voluntary disclosure going back 4 years. He was already in self-assessment and it was only the let property details that hadn't been included.
Only the last of the 4 years had any tax liability, and HMRC didn't charge any penalties, just interest on the unpaid tax. This was all done under the let property campaign that John has linked to, above.
I certainly wouldn't (& didn't!) make any promises to the client about this, and found the campaign helpline very helpful (rather surprising for HMRC!)
