Landlords warned about undeclared rental income but HMRC denies report of ‘clampdown’
A leading chartered accountant has warned landlords about paying undeclared rental income, but HMRC has denied there is a ‘clampdown’ on the issue.
Almost 60,000 disclosures have been made to HMRC, including £250m in unpaid taxes, since the UK launched a scheme in 2013. The Let Property Campaign allows landlords to declare unpaid tax in return for discounted penalties.
Donna McCreadie, a specialist Perrys chartered accountants, warned landlords that HMRC has been “intensifying its efforts” in recent months, to “track down” those who have undisclosed income.
She said “many landlords are now facing demands for back payments of taxes” as well as facing “large fines.”
The company warned fines can be hefty proportions of rental income, and landlords who receive letters demanding payment would get more than those who cough up cash voluntarily.
“It is vital you keep your income and expenditure records up to date” she told landlords, because “regardless of your reasons and no matter how overwhelming it might seem.. not declaring rental income is a criminal offence”.
“The longer you leave it, the bigger the tax bill and penalty you will need to pay”.
Warning people not to “wait until you receive a letter”, she said landlords should speak to a buy-to-let specialist.
McCreadie added a failure to declare might impact upon getting a mortgage on a property.
An HMRC spokesperson said: “We believe our customers want to pay the right amount of tax and we want to help those that are not paying the correct amount to put that right.
“The Let Property Campaign is an opportunity for landlords who owe tax through letting out residential property, in the UK or abroad, to get up to date with their tax affairs in a simple, straightforward way and take advantage of the best possible terms.”
It distanced itself from the claim there has been a clampdown in recent months, confirming there had been no recent increase in activity.
Perrys told City A.M. the figures were published initially by the Financial Secretary to the Treasury late last year, and HMRC do not usually publish the details.
It added that there is a 90-day period to provide details once the landlord has told the tax-man under the scheme, they intend to pay up.