Didnt declare rental income - what happens?

old yellar

hi, i recently got a letter for the revenue saying the "note i am in receipt of income from rents". it asks me so send back certain info etc. now the story is i dont currently own a renatal property, just my own home, but i did rent out a house elsewhere that i owned over 2 years ago - its sold this long. i never did declare it, i was renting 2/3 of the bedrooms and stayed there in the house too - well barring a few months. i reckon its about 4 years of this if the truth be told. I m wondering how this is brought up now, and what do i do??!

nompere

old yellar wrote: »

hi, i recently got a letter for the revenue saying the "note i am in receipt of income from rents". it asks me so send back certain info etc. now the story is i dont currently own a renatal property, just my own home, but i did rent out a house elsewhere that i owned over 2 years ago - its sold this long. i never did declare it, i was renting 2/3 of the bedrooms and stayed there in the house too - well barring a few months. i reckon its about 4 years of this if the truth be told. I m wondering how this is brought up now, and what do i do??!

You go and get professional advice.

Revenue know that you had rental income, so they won't let this drop. Probably one of your tenants filed a tax relief claim. Revenue won't tell you if this is the case, and nor will they tell you who made the claim, so you have no alternative to returning all the income. Behaving like an ostrich won't get you anywhere. Revenue have sufficient powers to go back as far as they like in case where a source of income hasn't been returned to them.

A professional could well save you money. He will probably be better equipped to mitigate penalties with Revenue, and he will certainly be better informed at knowing what expenses may be claimed to reduce the income.

Do check to make sure that you weren't within the rent-a-room relief limits.

Don't forget that there might well be CGT aspects of this if you sold the property a few years ago and didn't tell Revenue about that either.

old yellar

thanks for the advice. yeah its 2 1/2 years ago since i last got rent on the property. i rem what i did get and it falls v near the amount under the rent a room thing. but i never declared this. also my records are poor on who i had there - they were foreign men, v nice lads, but i cant rem from adam, any of there names and when the came and went.. i just sent an email back to them stating i currrently dont have rental income and i only own 1 property, my family home. i hope to ring them next week on it. i have proof i lived in the house when i owned it, does this make any odds? thanks again..

nompere

old yellar wrote: »

i have proof i lived in the house when i owned it, does this make any odds? thanks again..

Absolutely none.

It's going to be your job to satisfy Revenue that you have returned all the rents to them. You don't know, and they aren't going to tell you, which year or years they have details for.

Bear in mind that if Revenue aren't satisfied with your figures then they can and will raise estimated tax assessments based on their knowledge, for as many years as they think appropriate, and it is your job to be able to prove that they are wrong, otherwise they can and will collect their estimate of the tax. When it comes to income tax assessments the normal burden of proof gets reversed - they make the estimate and you have to prove them wrong.

You are going to have to do some serious remembering.

old yellar

cheers.. ah it was for nearly 4 years (1 lad there for duration, others came and went), whilst i dont rem any names/or have any chance of getting them, i rem the amounts involved fairly closely and by my estimates it was close to the rent a room figure allowance, just under. so do i just declare this, hold my hands up and say i didnt declare it, and get a fine? again thanks for your advice, you seem to know what you re talking about!

PCPhoto

be prepared to be sharfted by revenue

they are generally nice to you when you tell them your personal business - but if they get pi$$y ... you can expect them to "estimate" that you were making maximum money for X number of years while you owned the house.

so expect them to assume you always had an income for as long as you owned it - given you cant prove otherwise .... also they could look to add penalties/fines which could be a serious chunk of money.

At the moment Revenue are actually doing their jobs - for years the people within the offices just walked around - went to the photocopier and chatted with others in the office.
However, now the government purse strings are tight they are actually doing their job and trying to squeeze every penny out of those that failed to declare...or failed to make VAT/Income tax returns.... basically they are going after the middle classes - because the poor don't have it and the rich wont part with it.

I recently had a notice of ammendment (or something similar) put on my bank account - basically revenue sent a letter to the bank stating that I owed them VAT returns for the months of April/May .... and I was not allowed to use my account until that money was paid.
Revenue didnt want to deal with me - I knew I didnt have the money at the time to pay them and would be getting it within a couple of weeks (once I started to received payments) - this wasnt good enough - my bank account was stopped and even after the relevant monies were lodged the account still is not freed - something which I believe is illegal.

I understand the Revenue are trying to claim as much coffers as possible but their reluctance to listen to the ordinary person is ridiculous - I did owe them money, because I had not filed tax returns for earlier in the year - my reason is that I needed to use the VAT money to pay my rent/bills - I am still in arrears for other months and expect the same to happen....I am working whenever I can in an effort to make ends meet ...but as far as members of revenue are concerned - I'm not a person ...just a debt which they must collect.

nompere

PCPhoto wrote: »

I did owe them money, because I had not filed tax returns for earlier in the year - my reason is that I needed to use the VAT money to pay my rent/bills - I am still in arrears for other months and expect the same to happen....I am working whenever I can in an effort to make ends meet ...but as far as members of revenue are concerned - I'm not a person ...just a debt which they must collect.

Revenue take a completely different attitude to income tax on rents or other income than they do with either VAT or PAYE. VAT and PAYE are what they call "fiduciary" taxes, where the tax doesn't come out of your income but gets paid to you by someone else to be passed on to Revenue.

If you mess them around with those taxes you will indeed get a hard time.

You are more likely to be treated sympathetically in relation to income tax.

It generally takes some months of non co-operation before Revenue head into the more extreme methods of tax collection. If you make reasonable proposals to clear arrears while at the same time keeping up to date on current taxes they will usually listen to you.

As I remarked earlier, don't behave like an ostrich - and don't expect them to agree to let you use VAT to pay your rent.