Possible additional tax demands

[steveh]

We had an e-mail last week from our management company to say they've been advised that the Financas are now intending to try to claw extra tax back from the years 20111 - 2014 from people who own property in Portugal and sometimes rent it out as a holiday let. They're only going to allow expenses that were incurred during weeks that were actually let which is likely to generate substantial additional tax demands for many owners.

A tax lawyer they contacted said the law is very unclear and even though this sounds illegal - ie retrospectively changing the rules - it wouldn't be possible to organise a class action against it because every case would be different. Costs for an individual could apparently be at least 3000 euros - and it seems even if an owner won, the Financas wouldn't be obliged to pay their legal fees.

Has anyone else heard anything about this?

[widge]

We had an e-mail last week from our management company to say they've been advised that the Financas are now intending to try to claw extra tax back from the years 20111 - 2014 from people who own property in Portugal and sometimes rent it out as a holiday let

Very probable this is an ongoing situation.

They're only going to allow expenses that were incurred during weeks that were actually let which is likely to generate substantial additional tax demands for many owners.

Unlikely, allowable expenses are allowable, however the UK HMRC treat your time spent in your rental as a benefit in kind.

A tax lawyer they contacted said the law is very unclear and even though this sounds illegal, it wouldn't be possible to organise a class action against it because every case would be different. Costs for an individual could apparently be at least 3000 euros - and it seems even if an owner won, the Financas wouldn't be obliged to pay their legal fees.

Recovering unpaid tax is hardly illegal, it's either due or it isn't

Has anyone else heard anything about this?

The tax authorities have been scrutinising accounts at managing agent's offices for a year or so, they need the money !!

[steveh]

As I understand it, this isn't recovering unpaid tax but changing what expenses are allowable and then applying those changes retrospectively. People could only pay the tax they were asked for according to the rules as they applied at the time so in previous years the tax they want to claim now wasn't actually due. It's fine that they change what's allowable and what isn't, but not that they demand extra payments because they then apply those changes to previous years when different rules applied.