Landlords should bring UK tax affairs up to date before Renters Reform Bill is enforced in law
The Government is looking to introduce the Renters Reform Bill, which if made law, will be the biggest shake-up to housing laws in forty years.
Whilst the Bill will have implications for the 11 million renters in the UK, landlords have been advised to ensure that they are up to date with their taxes, as the Bill can potentially give HM Revenue & Customs (HMRC) more power to investigate compliance within the housing sector.
As part of the Bill, it has been proposed that a database be created with details of landlords and their properties let under residential territories.
Whilst primarily a useful tool for renters to check out the background of their landlords, the database could open the doors to HMRC, enabling it to use the publicly accessible data for compliance activities.
The Let Property Campaign
With the potential for stricter compliance for landlords under the new legislation, they are encouraged to keep up to date with their tax payments and reporting.
One scheme designed to aid landlords with getting up to date with tax is the Let Property Campaign.
It is an opportunity for landlords who owe tax through letting out residential properties both in the UK and abroad to get up to date with their tax affairs in a simple way and to take advantage of the best possible terms.
To take part in the Let Property Campaign you should do the following:
- Notify HMRC that you want to take part in the campaign
- Disclose to HMRC all income, gains, tax, and duties you have not previously told them about
- Make a formal offer
- Pay what you owe
- Help HMRC as much as you can if they ask you for more information
When you make your disclosure, you can tell HMRC how much you believe you should be paying in late payment penalties.
The payment will depend on the reasons why you have failed to declare your income. Any deliberately kept information will incur a higher penalty than a simple mistake.
Disclosing your tax information this way means that in the event you are required to pay a penalty, it will be much lower than it would be if HMRC finds out you have not paid enough tax.
The law allows HMRC to go back up to 20 years, and in serious cases, HMRC may carry out a criminal investigation.
The potential for a new public database for HMRC to investigate landlords is an additional reason why landlords should keep up to date with their taxes, and if they feel that they are not, then use the Let Property Campaign to ensure minimal penalties and avoid possible criminal charges.
Are you a landlord in need of tax advice? Please contact us today.