HMRC Let Property Campaign and what it means to you
The tax office has stepped up its scrutiny of landlords, sending letters to thousands of buy-to-let investors it suspects of bending the rules in order to pay less tax.
The letters, which will be sent to 40,000 landlords over the next four months, ask the recipient to make contact to arrange their affairs – or run the risk of a large fine or a criminal investigation.
An estimated 5,000 landlords have been sent the letters, which provide a 30-day window to respond before action is taken.
While HM Revenue & Customs (HMRC) has targeted property owners for three years, accountants said the past year had seen its approach toughened. It is understood that additional manpower has been deployed to hunt down the £500m underpaid each year. Tens of thousands of landlords are believed to be paying little or no tax on rental income and capital gains made on second properties.
Last October the taxman began a campaign to encourage landlords to come clean. As well as those with undeclared rental earnings, HMRC is also targeting landlords who have filed inaccurate tax returns.
Ten months on, the Revenue has begun gathering information from a wider range of sources, accountants said. Mark Giddens, a partner at UHY Hacker Young, said HMRC had gone beyond the Land Registry and the electoral roll. “It was not until April this year that the taxman sent out notices to letting agents in which they asked for details to be provided of everyone on their books,” he said.
“The housing benefit payments that go direct to landlords are also being monitored more closely. This information can be obtained through the local council’s records. By investing all this time and effort they have certainty stepped up the pressure on landlords who are not declaring enough, and the letters are the next part of that.”
Lucy Brennan, a partner at Saffery Champness, the accountants, said officials at the Revenue had been turning to social media for information.
“Those who let out a holiday home will not be registered to vote at that address,” she said. “The Revenue has increasingly been using social media to look into cases where a holiday home is, for instance, being advertised to friends to ensure that the right amount of tax is being declared on that property.”
Fewer than 500,000 taxpayers are registered with HMRC as owning second properties. The taxman estimates that the true number of landlords is much higher, at around 1.5 million, and wants to close the gap.
A spokesman for HMRC said hundreds of thousands of visits had been made to its campaign website, which is called Let Property (gov.uk/let-property-campaign). The site also offers landlords training in tax matters via an online tutorial.
The spokesman refused to disclose how many landlords had come forward voluntarily since the campaign started last October. “All rent from letting out a residential property or holiday home has to be declared for income tax purposes,” the spokesman said. “Telling us is simple and straightforward. The message for all landlords owing tax is simple – it is better to come to us before we come to you.”
The letter states: “HMRC has data related to landlords and is comparing this with what individuals have or have not told us. This letter is the first stage following that process as HMRC is aware you are a landlord who is letting property and that you may be liable for tax on any income.
“We need landlords to call us within 30 days of the date of this letter – so if you receive one, please act and respond. If you do not and our information indicates you have not declared or paid the correct amount of tax, we will take action which could result in you paying a higher penalty or you could face criminal investigation.”
For more information on how we can help, please contact us at firstname.lastname@example.org