So, what do you do if you have income from a property that you have not declared to HMRC? You are not alone, and it is surprisingly more common than you would think.
HMRC have access to more information than ever before and share information with financial institutions worldwide and are notified by Property Letting Agents regarding income from letting of properties.
The good news for you is that HMRC have opportunities for you to disclose the undeclared income to HMRC via the Digital Disclosure Service. Interest and penalties will be charged for the non declaration of the income on top of the tax that is due, but the penalties that will be charged will be less if you disclose first.
So our advice? Make the declaration before HMRC contact you. For those that fail to come forward, higher penalties or even criminal prosecution could follow. With the correct professional advice, lower penalties and affordable payment plans can often be negotiated.
PROMPTED LET PROPERTY CAMPAIGN LETTER
HMRC continue to target landlords who they know have undeclared rental income with a ‘prompted’ Let Property Campaign letter.
HMRC regularly send huge batches of ‘Let Property Campaign’ letters to landlords and other buy-to-let investors with undeclared rental income. This wave of letters largely targets accidental landlords with 1 or two rental properties.
WHO CAN USE THE LET PROPERTY CAMPAIGN?
The Let Property Campaign is open to all residential property landlords with undisclosed rental income. This includes:
- Landlords with multiple properties
- Accidental landlords with single rental properties
- Holiday lettings
- renting out a room in your main home for more than the Rent a Room Scheme threshold
- Non Resident Landlords who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK
PENALTIES AND INTEREST FOR NOT DECLARING RENTAL INCOME
The rate of penalties will vary depending on your individual circumstances and whether you made a ‘unprompted’ or a ‘prompted’ disclosure. Did you approach HMRC or did they approach you?
Interest will be charged from the date the tax is due till the date it is actually paid. So if you had rental profits back in 2012 then interest will accrue from then.
Incorrect or incomplete disclosures may also attract higher penalties.
Those with undeclared rental income should make a voluntary disclosure as soon as possible to settle on the most favourable terms.
Here at F9 Consulting, we have vast experience of dealing with disclosures via the Let Property Campaign. We are on hand to assist and minimise penalties and interest and often we can help you negotiate time to pay arrangements with HMRC.
We offer fixed fees for this type of work and offer discounts for multiple years.
Are you affected? Will you benefit from making a disclosure? 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.