by Margaret Black – WatkinsonBlack
If you are a landlord and do not notify HMRC of your chargeable income, and they find out through their own sources you may be issued with an ‘information notice’ in respect of rental properties. You will need to answer specific queries raised in the notice.
To avoid fixed penalties for noncompliance, you need to file a tax return with enough detail to satisfy the requests in the information notice. Please note, legislation allows HMRC to call on you to produce information and/or documents which are “reasonably required for the purpose of checking your tax position”.
The notice is valid as long as the information was reasonably required “at the time that the notice was issued”, filing a tax return might count as complying with the notice, but only if the return is complete and correct, and clearly includes information being sought by the notice. Information not reasonably required can be subject to appeal
Statutory records are what you are required to keep according to tax legislation Note: Items cease to be statutory records “when the period for which they are required to be preserved… has expired.” In the case of someone carrying on a trade, profession or business and includes the letting of property, the expiry date is the latest of:
- the date when any enquiry into that year’s tax return is concluded;
- the date when HMRC no longer has the power to open an enquiry into that year’s tax return; and
- The fifth anniversary of 31 January next following the tax year.
Until that expiry date, you are unable challenge a requirement for information or documents included in an information notice insofar as it concerns statutory records. After the expiry date, HMRC would need to demonstrate that it was reasonably required. It has also been advised that an item which was a statutory record on the day the notice was issued may no longer be one by the time the appeal comes to be heard. This means that, if there have been long delays, what had initially been an unchallengeable request for a statutory record can become fully challengeable on reasonableness grounds.
An ‘Old document’ is one that originates more than six years before the date of the notice. Old documents can only be included in a notice on the sign-off of an “authorised officer” – a provision to deter HMRC from routinely asking for old records without good need. Any officer can issue a notice requiring you to draw up schedules covering periods covering more than the previous six years. The exclusion also only applies to documents which were entirely finalised more than six years previously: Finally, even if an information notice called for an old document without the requisite signature of an authorised officer, that doesn’t mean the whole notice can be challenged – merely the invalid item.
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