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Mrs Bear

Taxman Should Ask For Details Of Btls

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Big article in the Money section - why doesn't taxman demand addresses of all BTLs, or how are they to check whether LLs are paying tax? At present no such detail required on tax returns, only the number of rental properties.

Both rent and CGT mentioned. Says some LLs are genuinely unaware that CGT is payable. "But other LLs are not so innocent. Type the words "how will HMRC find" into Google and the search engine will automatically fill out the rest of the sentence as "out about rental income."

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Surely this is how self assessment always works. You declare your rental income and HMRC decide whether to accept your figures or ask for more details, including addresses of properties and full accounts if that is what the inspector wants.

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Agree 100%. The working classes have been squeezed, now it's time to work up to the Rentiers! Clamping down on them ought to generate a decent income for HMRC and help get us out of the quagmire. ;)

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Can't they just move in to live their BTL?

I doubt Rentiers will want to give up their comfortable detached pile for some outdated studio / 1 bedroom pad (or other typical FTB home)to avoid paying the tax. ;)

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Surely this is how self assessment always works. You declare your rental income and HMRC decide whether to accept your figures or ask for more details, including addresses of properties and full accounts if that is what the inspector wants.

Presumably it would make a difference at least with CGT collection if properties were 'marked' as rentals. As it stands, how is anyone to know when the property is sold that CGT may be due?

Seems a whole lot too easy ATM to be 'conveniently unaware' - or just downright dodgy.

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Presumably it would make a difference at least with CGT collection if properties were 'marked' as rentals. As it stands, how is anyone to know when the property is sold that CGT may be due?

Seems a whole lot too easy ATM to be 'conveniently unaware' - or just downright dodgy.

With self assessment it's easy not to declare many types of income.......... until you get caught.

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I came across an aging hippie late last year who'd inherited a large property and was renting/licensing rooms with no written agreements, all cash in hand. Sordid, slummy set up. One of the tenants slugged him in the guts as a parting gift.

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Perhaps Hmrc will be forced to come down on BTL's eventually, given the big drops in tax revenue generally.

As oft mentioned on hpc, House debtors are sitting targets for the tax man / gov.

Edited by Saving For a Space Ship

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I came across an aging hippie late last year who'd inherited a large property and was renting/licensing rooms with no written agreements, all cash in hand. Sordid, slummy set up. One of the tenants slugged him in the guts as a parting gift.

I"m sure there is a lot of that. And the slummier they are, the more likely it probably is, esp. the beds in sheds.

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Surely this is how self assessment always works. You declare your rental income and HMRC decide whether to accept your figures or ask for more details, including addresses of properties and full accounts if that is what the inspector wants.

None of the BTLetters I know declare their rental income.

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None of the BTLetters I know declare their rental income.

It's only a matter of time then because rental properties are highly visible. HMRC are in no hurry as they can go back twenty years, or more, and charge interest and penalties. When it suits them, they will trawl through the Land Registry figures and there will be "wailing and gnashing of teeth".

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Can't they just move in to live their BTL?

Actually getting a BTL property and living in it is the latest mortgage fraud. If people who don't have the income to get a mortgage for the property but have a deposit get a BTL mortgage but live in the property themselves.

It's the equivalent of self-certified mortgages in 2007.

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None of the BTLetters I know declare their rental income.

Many BTL / accidental landlords with one or two properties are probably on PAYE and never fill in a tax form.

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It's only a matter of time then because rental properties are highly visible. HMRC are in no hurry as they can go back twenty years, or more, and charge interest and penalties. When it suits them, they will trawl through the Land Registry figures and there will be "wailing and gnashing of teeth".

They can say "you owe us £200k" and then its up to you to prove how much you actually owe.

And if you didn't argue the toss they might have another look at it.

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They can say "you owe us £200k" and then its up to you to prove how much you actually owe.

And if you didn't argue the toss they might have another look at it.

Worse than that, I read somewhere that Osborne is going to make it easier for them to deduct the money from your bank account and leave you to argue the toss to get it back.

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They should change rules so that every btl property should be run through a limited company. Get mortgage companies to enforce it. Annual returns therefore required. After all, they claim to be entrepreneurs running a legitimate business.

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They should change rules so that every btl property should be run through a limited company. Get mortgage companies to enforce it. Annual returns therefore required. After all, they claim to be entrepreneurs running a legitimate business.

And encourage them limit their liability?

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And encourage them limit their liability?

Encourage the banks to think about it as a bloody business not just a bit of something and nothing.

Would be harder for some to borrow money. Which would be a good thing.

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How do you know?

Mine all insisted on cash in hand.

On the occasions a bank transfer was set up (if I'd gone through an agency first etc), this would change to cash in a brown envelope not into their bank accounts when the tenancy was renewed.

I'd say the problem is pretty endemic from my experiences, but I'm surprised more hasn't been done to investigate how widespread it actually is officially.

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And encourage them limit their liability?

Well you cant generally accrue a multi year tax liability - you are forced to "pay as you go". A mortgage inside a LTD co will generally require a personal guarantee from a director so the liability limit wont help you in the case of -ve equity.

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They will get round to it eventually, until then they are happy to sucker more into buy to let to make the payoff better when it comes.

The sums don't add up for a landlord even when you ignore the tax obligations, add them as well and its an even worse 'investment'.

As a renter I'm quite content for them to ignore it for now… my landlords are making nothing on their properties but console themselves that it will all come good in the end due to their view that property always only ever goes up and you can't lose. Let them believe it. A realisation of their tax obligations won't help their rose tinted glasses, best to keep them sweet while they subsidise renters living costs.

Ignorance isn't only bliss for the ignorant. :D

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Worse than that, I read somewhere that Osborne is going to make it easier for them to deduct the money from your bank account and leave you to argue the toss to get it back.

That won't be a problem for BTLers then: all their money is in property, their yields don't allow them to accrue much in the bank.

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