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Is tax due on rent paid to an agent, but not passed to client?
My client owns a rental property which is let through an agent. Although the tenants have paid the rents due to the agent it has failed to pass on substantial amounts to my client who is now owed about £10 000.
Since we can now report rents on the cash basis my proposal is to report only those that the agent has passed to the client. But is this correct?
Would HMRC view the payment made by the tenant to be the amount reportable on the cash basis?
I look forward to replies and advice from Taxation readers.
Query 19 278– Landlord.
Reply by Bramble
The legal principles relating to the principal-agent relationship will apply.
The tax return of Landlord’s client must include all rental receipts including those paid by the tenants to the client’s agent. The point is specifically covered in HMRC’s...
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