BTL tax implications - scenario
Discussion
uknick said:
I quite agree with you Eric.
I'm currently on the horns of a dilemma as to whether I should let HMRC know what's going on.
Whilst there is no love lost between me and his ex, any action by HMRC will reflect on both of them. And, I'm pretty sure any fines/tax levied on her will be paid for by him (don't ask).
This might seem like cowardice on my part, but I'd rather not have to report them if I don't have to so I'm hoping the HMRC systems will pick up the sale and trigger an investigation.
let them get on with it I'm currently on the horns of a dilemma as to whether I should let HMRC know what's going on.
Whilst there is no love lost between me and his ex, any action by HMRC will reflect on both of them. And, I'm pretty sure any fines/tax levied on her will be paid for by him (don't ask).
This might seem like cowardice on my part, but I'd rather not have to report them if I don't have to so I'm hoping the HMRC systems will pick up the sale and trigger an investigation.
why would you poke your oar in??
uknick said:
Funny this thread should come up at this time.
My brother and his ex are selling a BTL they've had for 20 years. During that time they've never declared the BTL to HMRC, although he does say they've always only broke even.
With regard to CGT, apparently his ex is going to say it is her principal residence. (He has been non resident since before 2015). That might be an issue as they sold their family home about 2 years ago, which they had owned for longer than the BTL.
One other complication is for most of the BTL period, they've rented the place to a housing benefit claimant.
Despite my strongest advice to come clean about the lack of rental declarations and pay any CGT due without having HMRC catch them out, they seem determined to evade any tax due.
I see bad things arising.
If he/they has been non resident landlord then NRL tax applies as well at 20%. on top of any income tax etc.My brother and his ex are selling a BTL they've had for 20 years. During that time they've never declared the BTL to HMRC, although he does say they've always only broke even.
With regard to CGT, apparently his ex is going to say it is her principal residence. (He has been non resident since before 2015). That might be an issue as they sold their family home about 2 years ago, which they had owned for longer than the BTL.
One other complication is for most of the BTL period, they've rented the place to a housing benefit claimant.
Despite my strongest advice to come clean about the lack of rental declarations and pay any CGT due without having HMRC catch them out, they seem determined to evade any tax due.
I see bad things arising.
Edited by uknick on Tuesday 27th June 15:49
Did they use an agency to manage and collect the rent? If so they will have paid the 20% on his behalf if they knew he was a non resident and not exempt. he wont be exempt as you have to declare it to HMRC to get an exemption cert.
If it was just a tenant and no agency then actually the tenant should have been deducting the NRL tax before paying the landlord and can be also at fault.
By the ex saying it was her main residence for CGT- he may be asked to confirm this. Fraud - FFS !!!
As Eric said - its a dangerous ground to be on. Even more so if they are splitting up - as hell has no fury........
time for a clean break - let the HMRC know and get it in the open. At least at present its "just" the not declaring the income albeit a long time. Otherwise the CGT its going to come back big time and bite you both and will look like fraud.
I would be worried that HMRC will view this as a deliberate and continued fraud and hence jail time. With luck and declaring it asap a mistake on the accounting side of things for the income it will be a penalty and hopefully viewed as within the grounds of a mistake.
Edited by superlightr on Tuesday 27th June 17:23
uknick said:
dingg said:
let them get on with it
why would you poke your oar in??
Because they are evading tax, and I see that as no different to benefit cheats. Are you saying we should condone that as well?why would you poke your oar in??
Of course, morally it may be a different matter. But I would not wish to advise people on what their morals should be.
Depends on the nature of what the protagonist is up to. If the "business" was child prostitution or running a people smuggling racket, I might be inclined to inform the authorities - because people are being directly harmed.
Tax evasion (which is a crime) is of a different nature. Even though it is against the law, there is no person in immediate danger to specific individuals.
Having said that, as a professional working in the tax area, I am obliged, in certain circumstances, to notify the authorities relating to any criminal activity OF ANY SORT by my clients.
Tax evasion (which is a crime) is of a different nature. Even though it is against the law, there is no person in immediate danger to specific individuals.
Having said that, as a professional working in the tax area, I am obliged, in certain circumstances, to notify the authorities relating to any criminal activity OF ANY SORT by my clients.
dingg said:
well he's down on my list of grade a one w
kers
whatever happened to 'mind one's own business'
Thank you for your comment. But, as we're never going to meet I'm not too worried about being on your list. kerswhatever happened to 'mind one's own business'
BTW, you didn't answer my question as to whether you condone benefit fraud. I can only assume you do, as you clearly condone tax fraud.
With regard to minding my own business; your thoughts are the same sentiments expressed by a line manager in MoD when I raised an issue regarding senior military personnel fiddling their expenses. Funny enough, as a senior finance manager, I thought it was my business.
Whilst I agree tax fraud, and all public sector fraud, does not put an individual in immediate danger, the cumulative effect puts us all in danger; NHS cuts, emergency services cuts, military personal not correctly equipped etc.
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