Owners of UK holiday lets face fresh investigations by HMRC after Britain’s record staycation boom of the last two years, accountants at UHY Hacker Young told City A.M. this morning.
HMRC has the power to request information or documents from third parties such as holiday booking sites “for the purpose of checking the taxpayer’s tax position”. This includes entire databases of popular holiday booking sites.
AirBnB has previously agreed to share information on income earned by its UK hosts as part of a 2020 tax settlement with HM Treasury. As part of the deal, the company agreed to pay an extra £1.8m in tax and share data on hosts’ incomes with HMRC.
Over the next few months, ahead of the January 31 2022 deadline, owners of holiday flats and cottages will be filing their self-assessment tax returns that cover the first year of the Covid-staycation boom. Many will be tempted to under report the windfall earnings they have made in that period.
However, since Covid-related travel restrictions persuaded a far larger number of Brits than usual to book a ‘staycation’ this summer, this led to a boom for UK holiday lets and brought a lot of newcomers into the market.
Prices have surged for holiday lets, with increases of 35 per cent from last year seen in some tourism hotspots. Summer 2021 was predicted to see a 51 per cent rise in domestic tourism spending to £51.4bn**, but some sites have seen bookings increase by up to 300 per cent.
With the boom in staycations driven by the pandemic, leading to a bumper season for UK holiday lets, Neela Chauhan, partner at UHY Hacker Young, said HMRC will come for their slice of the pie.
“HMRC will be checking tax returns from people who have let property for a jump in declared income to reflect the staycation boom. Their algorithms will fairly easily identify those holiday homeowners who they think are under-declaring income,” Chauhan explained to City A.M.
“As HMRC’s Let Property Campaign targeting buy-to-let landlords shows, the Treasury sees landlords as an obvious target for tax investigations and extra tax revenue,” she added.
Landlords who fail to declare unpaid taxes are ultimately risking fines and criminal prosecution. HMRC was unavailable to comment.