Landlords – unpaid tax should be declared sooner rather than later
Landlords are being advised that HM Revenue & Customs (HMRC) is redoubling its efforts to crackdown on individuals who fail to properly report their taxes.
A number of reports have emerged recently which suggest that the Revenue’s Connect ‘supercomputer’ is being used by the tax authority to gather far-reaching data on taxpayers and to effectively crack down on those who are failing to declare or pay tax.
As part of this, HMRC are increasingly collecting data from the Land Registry and other organisations to compare against its own records
HMRC appears to have been particularly active in pursuing buy-to-let investors, going as far in some cases as obtaining lists from letting agents and matching these up to historic tax returns in a bid to catch landlords who aren’t 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 favourable to those who make early voluntary disclosure, rather than making a prompted disclosure under enquiry.
The Campaign is open to those who are renting out single and multiple properties, as well as non-resident landlords who are living abroad while 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, as an increasing number of individuals are likely to face greater scrutiny and potentially costly tax investigations as HMRC’s Connect ‘supercomputer’ becomes more effective as it draws information from a growing network of sources, including social media sites.