HMRC Targets Buy-to-Let Landlords
HMRC is cracking down on buy-to-let landlords who are not paying their taxes.
I have been following this topic with interest recently: for the past few years, private landlords have been the subject of HMRC taskforce teams in Scotland, North Wales, London, East Anglia, North East, North West, and following the success of the scheme since November 2012, this has now been extended to South East England, covering almost all of the UK.
Around one in three buy-to-let landlords are avoiding tax on rental income meaning an estimated £550m of tax is not being recovered: therefore the additional efforts of the government in this area are not surprising. The message should by now be ‘loud and clear’ that individuals who own buy-to-let properties must correctly declare all of the income and gains. Ignorance is not an excuse!
In my experience, often some of the ‘non-compliant’ landlords, who do not register with HMRC and declare their rental income, have little or no additional exposure to tax, as a result of various tax allowances and available reliefs either resulting in rental losses or a relatively modest profit. However, losses can be carried forward to offset against future rental profits, a major benefit of ‘getting it right’.
If you have property income or a gain on disposal that you have not declared, HMRC is likely to be much more lenient if you make a voluntary disclosure rather than being caught through their task force efforts.
If you are still not convinced, then beware… Information technology is making it increasingly easier for HMRC to trace the owners of let properties (including those selling) through the Land Registry and comparing the names to those on the electoral roll for said property. HMRC can also ask letting agents to provide lists of the landlords and properties that they serve, not forgetting the contentious inspector trawling through private landlord adverts and websites looking at names to cross check.
If you would like more information or any assistance with these matters, please call me on 020 8545 7624 or email me at firstname.lastname@example.org.
Download our residential landlord tax information brochure from our website.