HMRC Let Property Campaign
The Let Property Campaign, which began Autumn 2013, is a current initiative run by HM Revenue and Customs, and gives landlords the opportunity to come forward and disclose past undeclared rental profits.
Although this campaign is an opportunity for landlords to come forward, we must stress that this DOES NOT mean that HMRC will cease enquiring into landlords' tax affairs during this period or after, for those it suspects have undeclared rental income. It is therefore of significant importance that if you do have undeclared rental income, you should come forward to HMRC before they come to you.
HMRC sending letters to unsuspecting landlords and property investors
Building on the success of previous campaigns, HMRC plans to recoup up to £500m in annual unpaid tax from the up to 1.5 million landlords they claim to be aware of not declaring their rental income. As the campaign launched, publications showed that HMRC were aware that 1 in 3 landlords were not declaring rental income.
Chief Secretary to the treasury, Danny Alexander, broke the news of this latest campaign at the Liberal Democrats' Autumn conference. He stated...
"Over the last decade rents have risen twice as fast as wages, stretching family budgets. But some landlords still failed to pay the right tax due on the rents they receive. I'm talking about landlords who own more than one property, and who rent to students, people with holiday lets and those who let houses in multiple occupations. And it adds up to a staggering £500m owing to the taxman. And we want it back. So we're launching a campaign with a simple message for the rogue minority of landlords. Pay up or face the consequences."
Past HMRC campaigns have already collected over £500m in tax, and expect this campaign to be particularly successful.
The information has been sourced from all manner of data, including letting agents and Land Registry.
We feel it is important to draw everyone's attention to the fact it is not "if" they catch up with you, but "when".
And if they come to you, rather than you coming forward, as well as having to pay the tax owed, you could be hit with penalties of up to 100% of the outstanding tax. By coming forward, you will receive what HMRC refer to as "more favourable terms" and in practice, usually much lower penalties.
Times have changed, and HMRC's powers have increased and their desire to recoup unpaid tax has intensified.
Rita4Rent deal with countless Let Property Campaign cases, and given our experience in this area and knowledge of dealing with HMRC, we felt it would be useful to share a typical case study showing that the negativity can be mitigated, and positive results are achievable.
HMRC Online Tax Training
HMRC are offering landlords online training in tax matters. The computer-based tutorials make it easier for landlords to understand when and how to pay tax on property they have let out.
Laura Pollard, head of HMRC Campaigns, said:
"This package has been developed to help landlords get their tax affairs right from day one. They can also use it to keep them on track in the future".
The bite-sized modules explain to landlords:
- when and how property letting starts, and what to do
- the various types of property income - furnished, unfurnished, holiday lets, Rent-a-Room, the Non Resident landlord Scheme - and how they are taxed
- the correct treatment of income and expenditure, both revenue and capital
- tips on record-keeping
- property disposal, Capital Gains and Inheritance Tax
- tax return filing and paying dates - and when and how
- PAYE and VAT obligations