carolinehs

I have been a duel citizen (UK/Canada) for a quite a long time now, and 5 years ago I inherited part of a house in the UK when my father died. My siblings (who still live in the UK) and I rent the house out. We collect our own rents, and do not have the tax collected either by a management company or the tenants.

I have recently discovered to my horror that I have not been filling out the correct HMRC forms.

I have been declaring the income and expenses on a Self Assessment form every year since we inherited the property, and the net income is rarely more than the personal exemption. I have been paying any calculated taxes directly to HMRC.

I declare the net earnings on my Canadian tax form, and pay the appropriate Canadian taxes. I also filled out the t-1135.

However, I have mistakenly (stupidly) never filed the NRL form (Non-resident landlord: application to have UK rental income without deduction of UK tax - individuals (NRL1i)), and have never filled out an SA 109! Yikes!

This means, I suppose, that although I have technically been paying the correct amount of tax to UK and Canada, HMRC thinks that I am still a UK resident? I can see that this is not a good position to be in!

I imagine that the best thing to do at this stage is to write to HMRC and apologise for my mistake? Any suggestions?

Thank you

dave_j

I suggest that you investigate completing HMRC form Canada Individual. This form is to alert HMRC that you are no longer a UK resident and your UK tax code will be set to NT for no tax. Interesting there are a number of items on the form that should interest you.
It gives you the opportunity to state the country where you are resident for tax purposes and the date when you became liable to pay tax in Canada.
Another equally important feature are tickboxes at the very end of the document where you can opt to tell HMRC how much tax you want to claim back or you can have HMRC calculate this for you.
I opted for the second and was most pleased with the refund I received.
When my daughter left the UK I registered myself as a letting agent and was able, once she had completed her NRL1, to pass rental income to her without deduction of tax. Anyone can register as a letting agent and manage a property for anyone.

Tirytory

Although of course with the new laws passed, you have to complete courses etc, register with government to manage a property..

dave_j

Not sure about the courses but you're quite right, times have changed since I registered.

Tirytory

As of last year if you own a property that you let out you need to be registered with a government agency... Can't remember what mine is called now. If you go further and remotely manage then you will need to have completed various health and safety courses. Worth making sure you know about this.. My friend had some houses he was managing and so was managing mine on an ad hoc basis but he said with the new legislation it was just too much hassle and said he was handing his properties over to a registered letting/management agency and could I do the same. I've just finished negotiating the monthly fee with my sitting tenant with them. It was only late last year that the new legislation was required by law.

To the op, I've only just received approval to be a non resident landlord so I don't think that matters so much but I was making sure I had completed self assessment and additional forms also as you are non resident. You can buy software when you complete self assessment, but will notify HMRC so they can send you key and password to do it online...

carolinehs

Thanks so much for the advice. I will certainly submit the "Canada Individual" form and the NRL1. I must say that I am relieved that it is so straightforward, I feared that I might be fined for not declaring my Canadian residency as soon as I started earning money in the UK.

I have checked the HMRC site and it seems that the tenant will have to register with HMRC:
Tenants
If your landlord lives abroad and you pay over £100 a week, you need to register with HMRC and deduct tax from your rent.
You also need to register with HMRC if you pay a UK representative of your landlord, such as a friend or family member, who isn’t a letting agent.
You don’t need to deduct the tax if HMRC has told you in writing that the landlord can receive the rent with no tax deducted, but you must still register with HMRC and complete an annual report.


This seems a very onerous task for the tenant. Does anyone have experience with this?

In my case I share the rent with my two siblings, and the proportion of rent that I receive is less than £100 per week. Would this mean that the tenant does not have to register with HMRC?

Cheers.

dave_j

Just a note. You need to have an SIN in order to submit the Canada Individual to the local ofice of CRA that deals with your tax. They will return it to you bearing an official stamp confirming you pay canadian tax and then you forward the stamped form to HMRC. Be prepared to wait.