HMRCs Let Property campaign is working. A Freedom of Information request submitted by a leading accounting firm has revealed that the number of landlords declaring unpaid rental income has risen by a huge 145%. Clearly, the mailshots and letters sent out by HMRC are having the desired effect.
In 2017/18, 6,600 landlords saw the light and declared unpaid tax on rental income. In 2018/19, the figure rose to 16,110. This amounted to £42 million, which no doubt the Treasury is mightily pleased about.
Birmingham had the Highest Avoiders
The worst area for undeclared tax was Birmingham, with 494 landlords admitting to tax avoidance. Leicester and Nottingham were in second and third place. SE London was in fourth place, with 269 landlords coming forward there.
HMRC has long believed that the buy to let sector is a huge source of undeclared tax on rental income. Given the number of landlords coming forward to admit they haven’t paid enough tax, HMRC could well be right.
Do the Right Thing!
Experts say landlords are “doing the right thing” by coming forward.
“Whilst establishing and prosecuting a tax fraud involves a lot of hard work by HMRC they’ve made it clear that this is a route they will go down. The paper trail that exists with most property lettings makes it relatively simple for HMRC to show when tax is not being paid.”
Let Property Campaign
Landlords who fail to declare their property income are at risk of huge fines and criminal prosecution. The Let Property campaign gives them a chance to come forward and make a disclosure, taking advantage of the “best possible terms”.
If you have undeclared income, HMRC will give you 90 days to get your tax affairs in order. HMRCs Let Property Guide goes into detail about how to make a declaration, but it would be wise to consult a tax professional first before you throw yourself at HMRC’s mercy.
The Let Property campaign covers landlords of HMOs, single lets, student landlords, holidays lets, and owners of rental property who live abroad. It doesn’t cover landlords of commercial properties such as retail units or lockups. It also doesn’t apply to landlords who let properties via a trust or limited company.
Landlords are Honest…Honestly!
HMRC says it believes landlords are an honest bunch who want to do the right thing. It urges anyone who has “forgotten” to declare income to come forward so their tax affairs can be resolved in an amicable and straightforward way.
“If the errors were due to misunderstanding the rules or deliberately avoiding paying the right amount it is better to come to HMRC and admit any inaccuracies rather than wait until HMRC uncovers those errors,” says HMRC.
No End Date for Let Property Campaign
There is no end date and the campaign will continue running for the foreseeable.
“…landlords intending to come forward who delay, risk higher penalties if they are subject to an enquiry and they have not already notified an intention to disclose.”
So, if you are having trouble sleeping at night because you haven’t declared your rental income, now would be a good time to wipe the slate clean and pay what you owe. Otherwise, HMRC has a lot of resources at its disposal and rest assured, the tax man will go to great lengths to recover lost revenue.
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