Landlords are being advised that HM Revenue & Customs (HMRC) is intensifying its efforts to crackdown on individuals who fail to correctly report their taxes.
Several reports have surfaced recently which suggest that the Revenue’s Connect ‘supercomputer’ is being utilised, by the tax authority, to amass data on taxpayers and to effectively identify those failing to declare or pay tax.
As part of the operation, HMRC are increasingly collecting data from the Land Registry and other such organisations to make comparisons with its own records.
HMRC appears to have been particularly active in pursuing buy-to-let investors, even going as far as obtaining lists from letting agents and matching these up to historic tax returns to catch landlords who are not declaring tax.
These efforts come under what is known as HMRC’s Let Property Campaign. This long-running initiative gives independent landlords an opportunity to bring their tax affairs up to date, under reasonable terms, by making a voluntary disclosure to HMRC.
The penalty regime under the campaign is generally far more sympathetic to those who make early voluntary disclosure, as opposed to those individuals who make a prompted disclosure under enquiry.
The Campaign is open to those renting out single and multiple properties, as well as non-resident landlords who are living abroad whilst renting out property in the UK.
However, the scheme cannot be used to declare previously undisclosed income by companies or trusts renting out property.
Landlords are advised to act sooner rather than later; an increasing number of individuals are likely to face greater scrutiny and potentially costly tax investigations as HMRC’s Connect ‘supercomputer’ becomes more effective, drawing information from a growing network of sources, including social media sites.
Toni Hunter, property expert and Partner at George Hay, commented: “HMRC is really focussing its efforts on making sure that those failing to report their tax liabilities correctly, or otherwise failing to pay what is owed, have nowhere to hide.”
“Under the Let Property Campaign, landlords are effectively given the benefit of the doubt. From the date that any undisclosed income is declared, the individual then has 90 days to calculate and settle their liability. It is important that, if you think you should be making a disclosure, you make every effort to bring your affairs up-to-date as soon as possible to take advantage of the best possible terms with HM Revenue & Customs.”
We understand that effective tax planning can be a challenge for property investors, landlords and companies developing or managing properties. We know, only too well, the complexities involved and that’s why we have an in-house team of property experts to help and guide clients with property tax issues. Find out more about how we can help here.
You can also download our handy ‘Residential Property Letting – A Private Landlord’s Guide’ here.