Thousands of residential landlords could soon be receiving letters as HM Revenue & Customs steps up a campaign encouraging them to put their affairs in order or run the risk of tax investigations, higher penalties or even criminal prosecutions.
HMRC estimates that up to 1.5 million residential landlords may be underpaying up to £500 million in UK tax every year.
In September 2013, it launched the Let Property Campaign, under which landlords who may owe tax, for example because they misunderstood the rules, can voluntarily tell HMRC about any unpaid tax on rents, and pay what they owe, including any penalties and interest due.
The campaign is open to all residential property landlords, including those who lease out a single property, a large property portfolio, student or workforce rentals and holiday homes.
The Telegraph reported on 3 August that HMRC would be sending letters to 40,000 landlords over the next four months. According to the report, the letters say: “HMRC has data related to landlords and is comparing this with what individuals have or have not told us. HMRC is aware you are a landlord who is letting property and that you may be liable for tax on any income.
“We need landlords to call us within 30 days of the date of this letter – so if you receive one, please act and respond. If you do not and our information indicates you have not declared or paid the correct amount of tax, we will take action which could result in you paying a higher penalty or you could face criminal investigation.”
The government’s focusing on maximising tax revenue, including through initiatives like the Let Property Campaign, is likely to create an enhanced risk of tax investigations and the potentially serious consequences of these highlighted by HMRC.
With this in mind, any residential landlord or other taxpayer concerned about their own tax affairs, and who believes they might become subject to a tax investigation, would be wise to seek expert advice.
Our specialists at Taxation-Investigation can provide specialist advice to clarify their situation and on the options available to them, so they can make informed decisions about the best way forward. We can also assist in mitigating outcomes or presenting a robust defence where tax affairs are in order.