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Hi all, Recently we have received an e-mail from our accountant. It is an e-mail that has been sent to their complete clientele. The introduction of the e-mail is: HMRC routinely enquire into a number of tax returns each year. Following the pandemic and in order to maximise their tax take and reduce the forecasted £355 billion budget deficit they are increasing the number of enquiries into taxpayers returns that they undertake this year. Many people find an HMRC enquiry disruptive, intrusive, stressful, and ultimately expensive as the cost of the enquiry is borne by the taxpayer and not HMRC. A typical simple enquiry can cost on average £1,500 + VAT. We have partnered with Professional Fee Protection to offer their Tax Investigation Service. The service insures you in the event that you or your company are selected for enquiry. And after that it continues with a proposition with monthly costs for a service. I don't doubt HMRC conducts investigations but I think the information from the accountant is a bit scaremongering. Therefore I have the feeling it is more sales than actual customer intimate. Is there anybody who can shine a light on this matter? Is such a 'protection' (monthly costs for a service of which you hope never to use) worth the money? Should we be glad with this offer and accept it with a smile and gratitude? Thanks in advance. Btw.. this is my first post, I will introduce myself in the designated topic :)

Hi guys, I am setting up a portfolio using a ltd company - I have been quoted £300 + £95 for each additional property for reporting to HMRC and then an additional £125 for companies house reporting. Is this a normal price? Thanks!

Hi Hubbers, I'm looking to submit my CT600 and I hope to use TaxCalc to do so. However when looking at the supplementary pages offered the site offers CT600A to CT600K. Could someone please advise what supplementary page covers a UK Property Rental Ltd Company? Thanks a lot! Jordan

I'm looking for a bit of guidance on filing my first accounts to HMRC, without an accountant. I've had a good look through this forum and haven't found the answers I was hoping for so... I'm keen to do as much as possible myself, including my accounts. I've kept all the books but now It's time to file my first company accounts. Where do I start?! Below are a list of problems I encountered once I logged onto HMRC: 1. It's saying I can only file my Companies House accounts and that I need tax software to upload my HMRC accounts - why is this and how do it do it? 2. Do I file micro-entity, abridged or full accounts - and why?? 3. When on the 'Profits and Loss' page is my 'Turnover' all of my revenue income and 'Cost of sales' my revenue expenses? 4. When on the 'Balance Sheet' page, do my director's loans and mortgages fall under 'Creditors: amounts falling due after one year'? Also what's called up share capital? Essentially I feel a little out of my depth but it looks as though once I've got my head around it there should be no reason I couldn't do this myself. I appreciate I could just go to an accountant but I'd really like to try and figure it our for myself for now - I managed to do my own conveyancing myself after lots of research. Thanks in advance, Jordan

Hi all, This post is to see if anybody has had a similar problem to me this year, and if so to seek mutual solace that we are not alone!! I submitted my return in October, online. The amount was low enough to be paid through PAYE, which I opted for. At the start of 2018 I was getting text messages from HMRC reminding me to pay. I logged in and my account said "You have nothing to pay" which I took as confirmation it would be taken through PAYE. However by yesterday this was still niggling me so I logged in. My account was now saying I had to pay by close of play 31/1/18 (the 2016/17 payment deadline). Not only that but the amount had increase by almost £400. I rang the self assessment hotline but naturally being the deadline day I could not get through despite being on hold for 35 minutes. I have written them a letter today to try and find out what the situation is and to try and stave off any penalties for late payment. A quick google search brought up a couple of accountancy firm websites referring to a problem I could not understand around some 2016/17 payments on account being mis-recognised as payments for a previous year. Not sure if that is relevant to my situation as I haven't tried to make any payments. My wife's return went through with no problems, however we were always opting to pay hers immediately. Steve

Hi, I have a loss of about £50k in capital gains losses. Am I right in understanding that HMRC no longer allow losses to be carried forward indefinitely and I will just have to kiss that money goodbye? One option is to sell other properties which would allow me to use the loss before it "expires", but doesn't seem like a very smart idea in general... Are there any other options that I'm missing? This is a pretty bitter pill to swallow if I can't use the losses as and when I wish to sell up in future. Many thanks!

For those with individual properties worth more than £500k held within a Ltd. Company you may wish to read this article in The Telegraph: http://www.telegraph.co.uk/tax/news/hidden-mansion-tax-could-cost-buy-to-let-investors-thousands/ Another great reason to be investing in the Northern Powerhouse and especially Gods County - Yorkshire! Where investment properties don't tend to exceed £500k ;o)

Hello I'm hoping someone might be able to help with the following: I help my brother with his VAT, we registered him six months ago and he submits his return quarterly. He buys and sells a small amount of machinery and has bought 10 items recently paying VAT, each approx £1k each (inc VAT). He has only sold about 5 of the machines and charged VAT selling them. We have stated this in the two quarterly returns filled out. Our recent claim back for VAT was approx £1k. The HMRC have contacted us asking for more information and have said that they would write. I'm anxious as to what more info they require? We feel that we have done everything by the book and kept invoices (in and out going). Should we have saved any other information? Does anyone know what we might have done wrong/ not provided? My conerns are that he has sold some of the machinery without charging VAT as at the time of purchase he was not VAT registered- is this is a problem and should he have charged VAT? He obviously hasn't tried to claim back any VAT on these purchases. Thanks for any help in advance. Paddy

Hi all, You may already have seen the Law Society's comments and subsequent news coverage of the latest amendment to the Finance Bill 2016. Clauses 77 and 78 give rise to an income tax liability for property disposals in the United Kingdom. The Law Society was concerned that: the clauses were introduced hastily and with no formal public consultation; and the wording of the clauses implies that buy-to-let investors could be affected If so, property disposals could attract income tax bills as high as 45%, rather than capital gains tax bills of 28%. We have covered the topic in depth on our website, including: the background to the legislation the intention behind it the potential issues it causes existing guidance on REITs that provide insight into HMRC’s processes HMRC's current guidance on ‘intention at acquisition’ https://www.commercialtrust.co.uk/news/property-investment/new-tax-on-btl-property-sales/ The landlord community has been understandably alarmed by the news. Note that the government has stated that the legislation will only affect overseas property developers; it is not intended to catch out buy-to-let investors. The NLA has obtained clarification from HMRC to this effect. The issue is not with the policy intention, it is with the wording. This is why the Law Society is urging ministers to revisit the draft legislation. It is also encouraging HMRC to publish clear guidance around it. Hopefully this will provide assurance and clarification to anyone who was worried by the news.

The budget announcement changed an awful lot In previous years you could offset all of the mortgage interest you paid against your property income. If your property was furnished then you were also allowed a 10% wear and tear allowance. Both of these things helped to reduce your tax bill. But the world has changed since the most recent budget announcements, which I covered extensively in my previous article. Now you will not be able to offset all of your mortgage interest costs if you are a higher rate taxpayer, or even if your rental income before deducting mortgage interest costs pushes you from being a basic rate taxpayer into being a higher rate taxpayer. By 2020 a higher rate taxpayer will only get 20% tax relief against their mortgage interest costs, compared to 40% pre-April 2017. This effectively means that you will only be able to offset half the amount of the mortgage interest incurred against your property business. There has also been a significant increase in the amount of SDLT payable on new purchases, which I’ve also covered in a previous article. As you can see it is becoming even more difficult to invest in property while also being tax-efficient. It is therefore extremely important that you know exactly what costs are allowable… Allowable costs you can offset against your rental income The following types of costs may be offset against your property income to help you reduce your tax. This list is not complete but it gives you an idea of what costs may be allowable. Buying a property Repairs: exterior and interior painting, damp treatment, stone cleaning, roof repairs, furniture repairs Mortgage arrangement costs Legal fees associated with the loan, so legal fees related to mortgage financing of the property Other costs that you incur when buying a property such as conveyancing fees for the purchase, finder’s fees, the actual purchase of the property, stamp duty and surveys are capital costs. You can’t offset capital costs against your annual rental accounts, but you can offset them against any capital gain when you eventually come to sell the property. Refurbishment of the property One of the strategies that I’ve talked about in a previous article is still very much relevant today. By using this strategy you not only minimise your property profits but you could build up losses for the future. This means that you will not pay tax on your property profits in the future as long as those losses exist. The types of costs that may be offset against your income here are: Repairs: When carrying out repairs to broken units, roof tiles, furniture, plasterwork Renewals: Such as repainting your property, cleaning costs Replacement: For example, kitchen units, bathroom units, heating systems (boilers and radiators), lighting systems (including fuse boxes), carpets, curtains, fridges, freezers, TVs, beds, furniture (if all were in place at the time of purchase) HMRC had previously stopped people from claiming soft furnishings and freestanding units because it allowed the 10% wear and tear allowance, but since it has removed this allowance, if, for example, carpets and curtains that were already in the property need replacing then the replacement costs would be allowed. If you wanted to play it extra safe then I would suggest that you ask the sellers of any property you are buying to itemise the following on the sales documents: Value of the land and building Value of the kitchen Value of bathrooms Value of white goods (if supplied as a rental) This can then be used as evidence that there were assets in the property and will support the fact that you are replacing/repairing those assets, which means they can justifiably be offset against your tax. I would stress that you should not put in a kitchen costing £3,000 if the value in the sale documents only shows £1,000 as this will certainly be seen as an improvement and will be considered a capital expense. This works very well with properties that are in a lettable state but are very tired. As such you can justify to HMRC that the refurbishment costs will help you to increase the rental income of the property. HMRC guidance can be confusing on this issue, but on the issue of repairs it states: “If your roof is damaged and you replace the damaged area, your expenditure is allowable. “Even if the repairs are substantial, that does not of itself make them capital for tax purposes, provided the character of the asset remains unchanged. For example, if a fitted kitchen is refurbished, the type of work carried out might include the stripping out and replacement of base units, wall units, sink etc., re-tiling, work top replacement, repairs to floor coverings and associated re-plastering and re-wiring. Provided the kitchen is replaced with a similar standard kitchen then this is a repair and the expenditure is allowable. If at the same time additional cabinets are fitted, increasing the storage space, or extra equipment is installed, then this element is a capital addition and not allowable (applying whatever apportionment basis is reasonable on the facts).” Running your property business Allowable costs as part of you running your property business include: Rents and leases Business rates Council tax Water rates Ground rents Insurance Maintenance: cleaning, gardening Loan interest and finance charges (100% if you are a basic rate taxpayer but less as mentioned above for higher rate taxpayers) Legal and professional costs (removal of tenants, accountancy fees, coaching fees, etc) Utilities (if the tenants are not paying for them) Stationery Phone Travel: to the house and associated companies managing the property Hotels (if you are staying away for the purposes of your business) Subsistence (while away on business) Membership and subscriptions (property-related or management-related) Education for employees (provided that the education is enhancing your knowledge) Mileage With regard to mileage, I suggest claiming this rather than putting your car through your business as this would see you incur a benefit in kind or taxable benefit, or HMRC could claim that the car is used for personal usage and significantly limit the costs that you can offset against your property business. I have written a lot more about this subject with a spreadsheet for you to test your circumstances in another article. Next steps to implement the above It is one thing to understand the theory but it is another to put it into practice. This is why I have written a step-by-step guide to implementing this strategy: Ensure that you keep receipts for all your costs Get as much description from your tradespeople on the invoices you pay for refurbishment works. Ensure they use the words ‘repair’, ‘replace’ or ‘renew’ to ensure their work is tax-allowable Use a bookkeeping system to record your income and costs Review your numbers on a monthly basis to ensure that you are making money

Baffled by the new changes to taxation being introduced in April 2017 and how they affect YOUR situation. Start getting a handle on the bigger picture today by reading this recent tax guide and get in touch.............. Property and Tax (March 2016).docx

Hi My wife and I are currently buying our first investment property. My wife is a stay at home mum and I am a higher rate taxpayer (40%). In order to maximize the use of my wifes tax allowance we are looking at owning the property as tenants in common with a 99% / 1 % split between my wife and myself respectively. Would HMRC then treat this as 99% of rental income being attributable to my wife (with relevant form 17 filled out)? I'm not looking to set up a LTD company at this time, and both our names will be on the mortgage agreement. Any help or advice from Hubbers would be greatly appreciated! Thanks, Andy

Budget announcement – March 2016 What has changed? Corporation tax – Corporation tax will eventually drop to 17%, which is significantly lower than basic rate tax bracket of 20%. Tax bands: – Personal Allowance will increase to £11,500, and the higher rate threshold will rise to £45,000 in April 2017 Read about more of the changers in this article - http://www.optimiseaccountants.co.uk/budget-announcement-march-2016v2-2/#.VwN_URMrJE4