Client Background: A UK-based landlord approached Winsme Consulting with concerns about several buy-to-let properties. For the past five years, their accountant had incorrectly advised them that the income and expenses from properties owned in their personal name could be processed through a limited company. This advice led to significant tax reporting issues.
The Challenge: In the UK, tax relief for residential property varies greatly depending on whether the property is owned by an individual or a company. Due to the incorrect advice, the landlord had been providing inaccurate information to HMRC and claiming tax relief where it wasn’t allowed. This situation constituted tax evasion, posing a serious risk of penalties and legal repercussions.
Our Approach: Upon understanding the severity of the situation, we took the following steps to rectify the issue:
- Initial Consultation: We had an in-depth discussion with the landlord to understand the full scope of the problem and gather all necessary documentation.
- Detailed Review: Our team conducted a meticulous review of the landlord’s tax filings for the past five years to identify all inaccuracies and discrepancies.
- Education and Explanation: We explained the differences in tax reliefs available for properties owned personally versus through a company, ensuring the landlord understood the implications of the incorrect advice they had received.
- Strategic Plan: We recommended using the HMRC Landlord Declaration Campaign, which allows landlords to voluntarily declare any discrepancies. This approach often results in more lenient treatment from HMRC.
Detailed Analysis:
- Review of Past Filings: We meticulously reviewed the landlord’s past five years of tax filings to identify all inaccuracies.
- Understanding Tax Reliefs: We analyzed the differences in tax reliefs available for properties owned personally versus through a company.
- Legal Compliance: Ensured all corrections were made in compliance with UK tax laws to avoid any future issues.
The Solution: We prepared and submitted corrected tax filings for the past four years, accurately reporting the income and expenses. By utilizing all available tax reliefs legally, we were able to significantly reduce the landlord’s tax liability.
The Outcome: Through proper tax planning and legal routes, we reduced the average annual tax due from £1,400 to just £250. This substantial reduction was achieved by correctly applying the available tax reliefs and ensuring full compliance with HMRC regulations.
Client Satisfaction: The landlord was relieved and grateful for our thorough and effective handling of the situation. They appreciated our clear communication and the significant tax savings achieved. This case reinforced their trust in Winsme Consulting’s expertise and commitment to keeping clients safe and compliant.
Conclusion: This case study highlights the importance of accurate tax reporting and the value of professional advice. By identifying and correcting past errors, we helped the client avoid severe penalties and achieve substantial tax savings. Winsme Consulting remains dedicated to providing expert guidance and ensuring our clients’ financial safety.
Client Testimonial: “Winsme Consulting’s expertise saved me from a potentially disastrous situation. Their thorough approach and clear communication were invaluable. I highly recommend their services.”
Facing similar issues or need expert tax advice? Contact us today to see how Winsme Consulting can help you navigate complex tax situations and achieve significant savings.
