From time to time, H M Revenue & Customs (HMRC) launch sector-specific initiatives to encourage tax payers to come clean and declare income, which should have been previously declared.
One of the most successful campaign’s to date has been in connection with Let Property.
The campaign targets let property in both the UK and Overseas. Apparently, when this campaign was first launched, HMRC advised that fewer than 500,000 taxpayers were registered with them as owning a second property, but HMRC believed that a more accurate number of landlords in the UK was closer to 1.4 million, although the numbers have changed over recent years.
The obvious conclusion is that some individuals are not declaring their property income and gains and still HMRC are still sending out letters catching taxpayers where they have not yet declared to them despite this Campaign being around for many years.
So how does HMRC get their information?
HMRC has access to many sources of data it can use to identify landlords. Firstly, it can look through taxpayers income declared on Tax Returns and other databases to identify those who potentially own properties other than their homes and then cross check those records with Land Registry data as well as that from third parties such as lettings agents and mortgage lenders, which it is able to request.
Additionally, HMRC can access data held by Letting Agencies, which hold tenants’ deposits under the tenancy deposit protection rules and thereby identify landlords or properties. Information from the Valuation Office Agency can also be used to target people who have sold properties and not paid any Capital Gains Tax.
What can you do now?
As with everything related to HMRC, it is always more beneficial to contact them first, before they contact you.
If you have not declared any property income or sales, perhaps thinking that costs, including mortgage interest, exceed income, you should disclose your activities to HMRC and ultimately file one or more returns. Interest and penalties can apply of course, but failure to make a voluntary disclosure within the period of the campaign could lead to higher penalties and even criminal prosecution in certain circumstances if HMRC later discover that appropriate disclosure has not been made.
If you believe that you may be affected, and may benefit from this campaign, Contact us today to arrange a FREE consultation, we have Chartered Accountants and Tax Advisers in Canary Wharf, Essex and Manchester waiting for your call.