The process is that HMRC are notified (by either the individual or their advisor) that the individual wishes to take part in the LPC and HMRC write to them with a reference number and allow the individual 3 months to complete the disclosure. This is called an unprompted disclosure in that the individual volunteers to HMRC that they wish to declare rental income.
Periodically HMRC also obtain information regarding housing benefit or from letting agents (HMRC have the legal power to force local authorities or letting agents to provide this information) and HMRC will write to the individual to whom the rent is paid and invite them to take part in the LPC. This is called a prompted disclosure and has a higher penalty than unprompted disclosures.
For instances where there are reasonable records and only one property then the 3 month suggested deadline is reasonable where an experienced tax advisor is doing the calculation and the profit and loss account. For more complex cases, although HMRC suggest the 3 months, if it is going to take longer to complete the LPC forms then we have found that clear communication will result in the agreement of extended time to deal with the LPC.
When the form is received by HMRC they are entitled to ask questions but having undertaken hundreds of these types of disclosures we have found that providing good information is provided to HMRC with the LPC form then they generally get accepted.
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Our firm of tax advisors specialise in resolving people's problems with HMRC. We have extensive expertise in dealing with all forms of tax investigations and tax disputes as well as with taking matters to the Tax Tribunal where agreement cannot be reached.
We deal both directly with the individual who is under enquiry and also work with many firms of accountants supporting them in dealing with HMRC disputes and advising them on how to handle HRMC to get the best result.
The fact is that proper management of HMRC is the best way of reducing the tax, interest and penalty as well as the time taken in resolving any tax dispute.
Our expert team are none judgemental and rigorously defend your position within the scope and parameter of the law. We take control and manage the process to minimise the interruptions that any form of tax investigation causes to an individual's life and business."