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The HMRC has been ramping up its efforts to collect extra revenue.  As The Let Property Campaign, targeting private landlords continues to be the Revenue’s most lucrative voluntary disclosure schemes.

HMRC launched the Campaign in September 2013.  They estimated at the time that approximately 1.5 million landlords may have been not been paying enough tax, or were paying no tax at all.  It should be noted, it should have run for only 18 months but extended indefinitely, due to its success.

11,129 Private Landlords Caught Up in Tax Avoidance

The HMRC ramped up activity on the buy-to-let market in 2019.  As a result, the clampdown reaped millions of pounds of additional tax revenue.   According to a Freedom of Information request by the Daily Telegraph, the HMRC found 11,129 landlords were impacted.  These had either underpaid their income tax, or simply had paid no income tax at all on their rental properties.  8,704 were caught out in 2018 – a 28% increase compared to 2019.

£44.7m of Tax Recovered by HMRC

The Tax Office have recovered a massive £44.7m in tax from landlords in 2019, compared to £32.8m in 2018.  Importantly, the numbers don’t stop there for landlords or accounting professionals acting on their behalf.  Along with this, they also coughed up £7.6m in fines for non-payment of income tax.  Subsequently, a 36% increase on 2018.

More Education Needed?

The Residential Landlord’s Association highlight’s the complexity of the scheme and lack of understanding by private landlords to be a major factor behind the increase.  They claim that a large proportion of those involved making honest mistakes when submitting their tax returns, rather than intentionally avoiding tax.  The RLA’s spokesman David Smith told the Telegraph, that the high number of errors were not a surprise “given a number of recent changes and an increasingly complex tax system affecting rented housing.”

What Private Landlords Need to Know about the Let Property Campaign?

You can find detailed information on our Let Property Campaign page.  Here follows a quick summary: –

What is the LPC?

  • An opportunity for residential landlords to make a declaration to HMRC if they need to declare rental income.

Who is impacted?

  • Landlords who own and rent out a residential property, or a room in their main property.
  • Property owners who live overseas and rent out property in the UK, or live in the UK and rent a property overseas.  Equally, if they rent out a holiday home.
  • It doesn’t include companies or landlords renting our commercial property.

What you need to do?

  • Read up on the campaign to see if it applies to you.
  • Be on the front foot and disclose any unpaid taxes to the HMRC.

Benefits of making a full admission

  • If you make a full admission before ‘prompted’, you will benefit from favourable penalties and save on fines.
  • HMRC can potentially go back 20 years, or worse still carry out a criminal investigation if one is caught.  If you have registered for self-assessment and completed tax returns, but have simply made a mistake, HMRC will only go back 6 years.

For confidential advice and help call us on 0800 471 4546.