Taskforces and new tax years – Tips for landlord tax Call us today on 02476 458585
The new tax year has begun, and with it comes an opportunity for property owners to get their financial affairs in order.
At the end of 2012, HMRC announced the launch of a new task force targeting property owners in the South East of England. Last month this task force’s activities were extended across the country, in an attempt to crack down harder on property owners who misreport their profits. Property owners are therefore being encouraged to take some time to give their record keeping and tax arrangements a once over.
We have compiled some simple questions to determine whether you are on the right footing.
1. Are you keeping accurate records? Accurate and comprehensive record keeping is one of the key responsibilities facing property owners and other small business owners. It is vital that you keep records of your income and expenditure – not only because you are legally obliged to do so, but because it is one of the most important ways in which you can determine the health of your business.
If you have not already done so, you might consider investing in bookkeeping software to help you do this quickly and efficiently. There is a range of solutions available, many of which are hosted online meaning that you don’t even have to install any software.
2. Have you properly declared your income? You have a legal obligation to declare the income you derive from your rental activities. If you are concerned that you may have misreported your income, it is vital that you contact HMRC as a matter of urgency. You can make an ‘amendment’ up to 12 months after the deadline for the relevant tax return. If you file your return online, you can make your amendment online too. In order to do this you need to log in, go to the page marked ‘At A Glance’, and then select the option to make an amendment. If you filed on paper, you simply need to post HMRC the relevant page, clearly marked ‘Amendment’, along with a covering letter explaining the correction. HMRC will then advise you as what steps come next.
3. Are you claiming the right allowable expenses? Property owners are entitled to offset certain expenses against their total tax bill. These include the cost of your buildings and contents insurance, agency fees, legal and accountants’ fees, mortgage interest, and miscellaneous costs incurred such as phone and internet bills. Again, your ability to claim these reductions is contingent on good record keeping.
4. Are you prepared for the business records check? Finally, property owners should understand that they are also at risk from HRMC’s controversial business records check system. Under this regime property, owners and business owners receive letters from the taxman advising them that they will have to undergo a phone interview to determine whether they are keeping sufficient records.
For more information about the tax obligations of a property owner, please do not hesitate to contact us on 02476 458585.
