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Offline Andy88  
#1 Posted : 27 November 2014 13:56:26(UTC)

Rank: Newbie

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Joined: 27/11/2014(UTC)
Posts: 1
Location: Manchester

I have a client that swears blind he has read that you can declare rental income on a cash basis (rent received) as opposed to the accruals basis (rent due) in the year.

I am sure this is no longer the case.

Anyone agree that rental income must be declared on a rent receivable in the period?

Client has me doubting my own experience now!

Offline TaxGuru  
#2 Posted : 27 November 2014 14:06:27(UTC)

Rank: Advanced Member

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Joined: 01/04/2014(UTC)
Posts: 37
United Kingdom
Location: Berkshire

Was thanked: 2 time(s) in 2 post(s)

Keep your sanity you are not going mad!

Rental income for an individual should be declared on a rent receivable basis NOT as cash basis.

HMRC's 2014 Property Pages Notes see page UKPN 2 top section "Accounts" title and the 3rd para which states:

You cannot use Simpler Income Tax (also known as the Cash Basis) for
property income.

I also get some clients who think they can declared rental income and expenses for any accounting period they like! Again for individuals this is NOT correct and HMRC state in their guidance notes:

If you prepare accounts for your property income and they were drawn
up to 5 April 2014, transfer the figures to the appropriate boxes on the
UK property pages. If they were drawn up to any other date, you will have to
apportion the figures in the sets of accounts that between them cover the year
6 April 2013 to 5 April 2014.

If you every get a problem in a tax enquiry where a client has done something different HMRC often ask (in my experience) if you dispute the basis and HMRC adjust the figures (and potentially fine the client for an incorrect tax return:

"Did you read the guidance notes before completing your tax return?" If you say yes they say well you either knew it was wrong or we "careless" in not completing the return correctly in view of what the guidance notes say on this topic and if you say no you didn't read them they might start arguing "neglect". this can affect the penalty rates charge by HMRC.

Best to get it right as per HMRC guidance in the first place!

Hope that helps...


Edited by user 27 November 2014 14:38:54(UTC)  | Reason: Not specified

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