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Landlords – How Good are Your Property Records?

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Landlords – How Good are Your Property Records?

Tax Article
I’ve just been reading our newly updated tax report: ‘How to Master a Tax Investigation’, written by our tax investigation specialist, James Bailey.

In it he has written a short section about the importance of good records and how, if the Tax Inspector is able to break your records, it can cause a great amount of trouble.

Here is an excerpt from the report...

“Because some investigations happen at random, there is no absolute defence against getting investigated in the first place, so what we should really talk about is the best defence when you do get investigated.”

The best defence is to have proper and carefully kept business records, and to make sure that the accounts are prepared in accordance with those records.

Now this may sound easy but in practice most of us are sometimes a bit lazy about it and it is very important to keep proper detailed records. If you have any doubts about what records you should be keeping, ask an accountant.

The first job of an inspector running an investigation is to “break the records” – that is, to demonstrate that they cannot be relied on as a basis for the accounts. Once they have done this they have a justification for substituting their own estimates of what they think the profits should have been.

I cannot emphasise enough the importance of keeping meticulous records.

All tax advisers – and tax inspectors – are well aware of a real case where HMRC were able to prove that one specific sale from a shop had not been recorded or declared in the accounts – the customer had become suspicious when she was asked to make out her cheque to a name different from the name of the shop, and had reported this to HMRC.

This case went to court and the Court agreed that the proof of this single deliberate omission was enough to “break the records” and allow HMRC to substitute their estimate of what the profits should have been.”

So what does this mean for you?

You need to have good and proper records for your property business.

This article is written by Amer Siddiq, who is the founder of www.propertyportfoliosoftware.co.uk

Our award winning Landlords Property Manager software will not only help you to keep good and proper records, but it will make your life as a landlord much easier. Click the link to learm more about the software solutions from Property Portfolio Software.