legends · 4 min read ·
Income Query
A tax enquiry about rental income on a non-existent fourth floor ends with the tenant paying the landlord's bill.
**Northern Revenue Service — Compliance Enquiry C/26/9081**
**Taxpayer:** Mr. G. Ashworth · **Year of assessment:** 2025–26 · **Enquiry officer:** D. Pryce
· · ·
**Letter 1 (Revenue to taxpayer's agent, 3 September)**
*Dear Mrs. Okafor (Okafor & Co, Chartered Accountants),*
*We are reviewing the return of Mr. G. Ashworth. We note that his self-employment income is nil and his rental income is £14,400. We note a source of income described as "occupancy fee — 4th floor." Please provide details of the source and the nature of the services provided.*
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**Letter 2 (Okafor & Co to Revenue, 12 September)**
*Dear Mr. Pryce,*
*Mr. Ashworth owns a three-storey house at 14 Weir Lane. He lets the ground floor and first floor to tenants. The "4th floor" payment is from a tenant on a floor that does not appear in the property particulars. The house has three storeys. There is no fourth.*
*Mr. Ashworth has explained that the tenant pays £500 a month, in cash, in an envelope left on the hall table. He has never seen the tenant. He says the envelope appears on the first of each month.*
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**Letter 3 (Revenue to Okafor & Co, 18 September)**
*Dear Mrs. Okafor,*
*We have inspected the property. We confirm there is no fourth floor. We note a hatch in the first-floor ceiling, but it leads to the roof void. We did not enter.*
*We would like Mr. Ashworth to confirm the identity of the payer.*
· · ·
**Letter 4 (Okafor & Co to Revenue, 30 September)**
*Dear Mr. Pryce,*
*Mr. Ashworth has now looked into the matter. He says that on the first of the month he sat in the hall from midnight to see who left the envelope. At 00:01 the hatch in the first-floor ceiling lowered itself, a ladder unfolded, and a hand came down, holding the envelope. The hand was pale, with long fingers. It placed the envelope on the table, and withdrew.*
*Mr. Ashworth asked, "Who are you?" There was no answer. The ladder folded up. The hatch closed.*
*He has asked me to say that he would prefer not to know. He asks whether the fee is taxable.*
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**Letter 5 (Revenue to Okafor & Co, 7 October)**
*Dear Mrs. Okafor,*
*Income from letting is taxable, whether or not the identity of the payer is known. Please provide a description of the accommodation provided to the occupier, as required to calculate any deductions.*
· · ·
**Letter 6 (Okafor & Co to Revenue, 20 October)**
*Dear Mr. Pryce,*
*Mr. Ashworth reports that he does not provide any accommodation. The occupier does not use the house. The occupier does not use a toilet, a kitchen, or a bed. The occupier uses only the space above the first-floor landing, which Mr. Ashworth cannot enter.*
*Mr. Ashworth reports that he has been paid every month since 2011. He adds that the sums have been increasing. The last envelope contained £5,000.*
*He enclosed a note. In his own hand. It says: "I think the rent is not for the room. I think it is for my not asking."*
· · ·
**Letter 7 (Revenue to Okafor & Co, 27 October)**
*Dear Mrs. Okafor,*
*We have considered Mr. Ashworth's explanation. The Service accepts that the payments are receipts of a casual nature. We have accordingly assessed them as miscellaneous income, taxable at the taxpayer's marginal rate.*
*We have also noted a further item. In our records, the account of the payer is listed under the heading "Occupier, 14 Weir Lane (4th floor)." The occupier files a return. The occupier's return has been submitted every year since 2011, in good order, showing income of nil, and the following deduction:* **"Rent paid to G. Ashworth: £60,000 over 14 years."**
*Under Regulation 6 of the Rental Income Rules, a tenant who pays rent for accommodation is entitled to deduct it. We therefore require the landlord to confirm that the accommodation was actually provided.*
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**Letter 8 (Okafor & Co to Revenue, 3 November)**
*Dear Mr. Pryce,*
*I regret to inform you that Mr. Ashworth has died. He was found at the foot of the ladder in the first-floor landing, which the fire service say had been pulled down from the hatch, and that he had climbed it. They say there was no fourth floor above the hatch, only the roof void and a sheet of joists.*
*They say the void contained a single envelope, containing £5,000. It was addressed to him. It is damp.*
· · ·
**Letter 9 (Revenue to Okafor & Co, 10 November)**
*Dear Mrs. Okafor,*
*Enquiry C/26/9081 is closed. No further action. The taxpayer's liability for 2025–26 has been discharged in full by a payment received on 5 November, from the account of the occupier of 14 Weir Lane (4th floor). The occupier's remittance advice reads:* **"For the landlord. Final settlement. Thank you for not asking."**