The pensioner client had four buy-to let (BTL) properties on which he had not declared any rental income for over 18 years! This was done primarily because the properties needed loads of refurbishment and most of rental income had been used for upgrading purposes.
While the pensioner had always received PAYE income where taxes were deducted at source, he assumed that he had no responsibility to file his tax return. This was because he thought that as he had not received any cash benefit from purchasing the property through PAYE income where taxes had been paid at source, he only needed to pay Capital Gains Tax once he sells off his properties.
Therefore, once he was about to sell off his property, the client approached Lanop. After explaining to him that there is a difference in cash and reported taxable profits – he was left alarmed and, resultantly, sought expert advice. Thereafter, Lanop advised him to make a full disclosure of undeclared rental income of over 18 years through Let Property Campaign.
After Lanop’s involvement with the client, full disclosures for the all the past 18 years were made, tax affairs for future were structured (by giving a share in properties to his wife so they, as a couple could pay lesser tax on rental income) and an acceptable payment plan was negotiated with HMRC to pay off all previous tax liabilities.
It was because of this that the client remarked: ”It was a very taxing exercise as I had to go back and get all my financial records for the past 18 years, but Lanop staff – both from junior to senior tax partners, not only encouraged me but helped me in getting my records up to date. I am extremely grateful to them because now at the age of 66, I can go to my bed without any tax concerns.”
At the end, the client and HMRC were both happy with the outcome.