The Rental Property Disclosure Dilemma

Posted: 8th August 2025

Something is frustrating about trying to explain the past, especially when important paperwork is missing and years have blurred. That’s where our clients find themselves grappling with a rental property issue where they can no longer provide an accurate account of outstanding liability, supported by detailed documentation.

A rental disclosure is far from perfect. But it requires an honest effort from the client to provide clear transparency in relation to their tax affairs. It’s about giving HMRC enough evidence to fill in their information gap to come to an informed decision. Completing a disclosure can be hard even under perfect circumstances. Throw in years, missing receipts, faded memories, unforeseen circumstances, and it becomes almost impossible. 

One of the most common questions we receive is “What if I don’t have all the records anymore? How will HMRC react to this?”

It is common for records to go missing during house moves. Receipts become faded, tenants fluctuate, leading to sudden changes, and life happens. But that doesn’t mean your disclosure is finished. The important thing to note is that you can still go ahead with your disclosure. 

The general rule is that you are not expected to keep records for more than six years. So if a disclosure is made for a longer period, a lot of estimations and best judgment calls are made.

A client came to us recently with a complex rental disclosure spanning over twenty years. By the time they reached out, they felt overwhelmed and very sceptical of HMRC’s acceptance of their disclosure. 

When we began reviewing the case, some gaps were difficult to fill. Receipts had been lost in the transition of homes. Tenants had been dispersed on many occasions, and many events unfolded in between. 

The situation was made harder by the client’s struggle to provide a clean narrative. This is not because they were hiding something, but because the information was distorted over such a lengthy period. A regular question was, “Are HMRC going to accept that this event took place where our rental income was affected, but we have no receipts?”

Our response entailed that the passage of time, being 20 years, constituted a reasonable excuse for not retaining documentation or receipts. HMRC acknowledges in its Compliance Handbook (CH56100) that where records are no longer available due to the expiry of statutory retention periods, taxpayers may rely on reasonable estimates and assumptions, given that they are consistent across the disclosure period.

In situations like this, it’s not about blaming the client for withholding all relevant information. It’s about conceptualising human behaviours and providing context. 

We were able to prepare a disclosure that acknowledged what went wrong. We explained why, completed calculations and proposed the disclosure. In the end, the client felt an enormous sense of relief. 

These kinds of situations are more common than you think. As a tax agent, we work with people every day who are navigating disclosures

We work with clients to assess where they stand and how to move forward to come to a satisfactory conclusion. As a niche boutique with highly experienced tax advisors, we repeat the rhetoric and encourage voluntary disclosures. When made with care, these can lead to reduced penalties and a more favourable result. But it’s important not to delay once you recognise there’s something to disclose. The quicker you act to disclose your liability, the better the outcome is. HMRC acknowledges and respects the taking of action.

On recruitment, we were informed of the emotional aspect of this line of business. On many occasions, we witness emotional traumatic breakdowns from clients feeling ashamed and distraught, feeling they are unable to meet their obligations and comply with HMRC’s unrealistic demands.  You’ll have a supportive team that brings reassurance by taking steps to build your confidence and reach the best outcome. 

How we can help

If you are worried about a rental income issue that’s unresolved and you’re not sure where to start, we can help you review the position. If necessary, we will make the appropriate disclosure to HMRC and minimise any possible penalty charges.

If HMRC has already contacted you to suggest that there may be any issues about your rental income, we can help you to deal with enquiries most efficiently. Get in touch today with any questions.