HMRC Cracks Down On Landlords

As a landlord of one or more properties from which you receive rental income, you may not yet be aware of a campaign launched by HMRC in recent months.  The Let Property Campaign is targeted at individual landlords (this excludes companies or trusts) who privately rent out property and who may not be paying the appropriate amount of tax on their rental income.

The campaign forms the focal point of HMRC’s attempt to recoup what it believes may amount to around £500 million of unpaid tax every year.

Landlords who may not have declared all of their income have the opportunity to rectify the situation by making a ‘voluntary disclosure’.  Failure to do so may result in a criminal prosecution.

Over the next few months, HMRC is expected to write to around 40,000 landlords it believes may not have paid the correct amount of tax, or declared their total income received from rental properties.  Once contacted, landlords have only 30 days to respond by providing a breakdown of their income and outgoings to prevent further action being taken against them.

In essence, landlords must tidy up their tax affairs, or face the consequences.

According to official figures, fewer than 500,000 individuals are registered as owning second properties, although HMRC estimates the actual figure at closer to 1.5 million. Furthermore, it believes that tens of thousands of landlords pay little or no tax on income received from rental properties. The campaign is also focused on landlords who may have filed inaccurate self-assessment tax returns.

As the government steps up the pressure as part of its ongoing campaign targeting property owners what can you, as a landlord, do to ensure you are meeting your legal obligations?

Get in touch with the Inland Revenue : Their website allows you to complete a notification form together with a disclosure form which allows landlords up to three months to repay any outstanding tax.  Landlords requiring more time are advised to get in touch with HMRC before the end of the three month period.

Calculate what you owe : HMRC’s website provides a calculator to help you work out how much tax you owe, including a separate section for any property owners who may owe more than five years of unpaid tax.

Take an e-learning course : Provided by HMRC, this online course helps landlords to understand about the different types of property income, taxes and requirements for detailed record keeping.

Seek financial advice : If in doubt, contact a professional to ensure accuracy in your self-assessment declaration.

Rent your property through Redstones : As part of our managed service, we provide our landlords with a detailed self-assessment tax report which means you don’t have to worry about undeclared income or inaccurate tax returns. This gives our clients who choose this service complete peace of mind. It’s yet another reason to rent your property through Redstones.

If you suspect you may have failed to declare the correct amount of income on your rental properties, it is important to take appropriate action to avoid facing a significant fine or the possibility of a criminal prosecution.

To prevent problems with future rental income, contact Redstones today for more information on our property management services.