There was a 51% rise in residential landlords being pursued by HMRC for underpaid or undeclared tax on letting income in 2018.
8,704 property landlords were investigated last year under HMRC’s Let Property Campaign which began in 2013. A scheme where an individual landlord letting out residential property, here or abroad, voluntary informs HMRC of any undisclosed income from said property. In return they receive the best possible terms to pay the tax owed! The scheme was to run for a minimum of 18 months but is now running until further notice.
In 2018 HMRC saw a 67% increase in the amount of income tax clawed back from landlords, equivalent to £32.8m. The value of the fines being £5.6m.
Property landlords who underpay tax on their letting income can be fined up to 100% of the value of the unpaid tax plus criminal charges can also be brought. Those property landlords who disclose genuine errors are dealt with less severely with HMRC going back just 6 years and smaller fines if any. If you voluntarily inform HMRC of undisclosed letting income you have 90 days to pay the correct amount plus any interest or penalties.
Chris Norris, of the National Landlords Association said “Tax can be a complicated and confusing process for landlords who are trying to cut costs by doing their returns themselves, rather than seeking specialist advice. It is possible some landlords have unwittingly disclosed less tax on letting income than they should have.” John Stewart, of the Residential Landlords Association, said: “The tax system is becoming ever more complex in the private rented sector, and communication from HMRC on changes to mortgage interest relief has not been sufficient.”
If you require any assistance on this matter, then please call us on 0113 286 4486.
Source: The Daily Telegraph (09/02/19)/TaxAssist Accountants
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