HMRC targets buy-to-let landlords
HMRC has launched what it calls its ‘Let Property Campaign’ to target buy-to-let, student and holiday let landlords that it believes are underpaying or deliberately not declaring rental income.
The campaign builds on previous initiatives aimed at plumbers and electricians, building contractors, takeaway restaurants, motor traders and many other sectors that have collectively seen HMRC collect over £800m in unpaid tax.
Danny Alexander, Chief Secretary to the Treasury, announcing the crackdown last week at the Liberal Democrat conference in Glasgow, told landlords to “pay up or face the consequences”.
Alexander said up to 1.5 million landlords might have underpaid or failed to pay what was owed.
“Over the last decade rents have risen twice as fast as wages, stretching family budgets. But some landlords still failed to pay the right tax due on the rents they receive. I’m talking about landlords who own more than one property, who rent to students, people with holiday lets and those who let houses in multiple occupations,” he said.
“And it adds up to a staggering £500m owing to the taxman. And we want it back. So we’re launching a campaign with a simple message for the rogue minority of landlords. Pay up or face the consequences.”
Stephen Barratt, private client tax director at tax advisers James Cowper said:
“This campaign is designed to give residential landlords the opportunity to come forward and disclose any unpaid or under paid tax. This is a window of opportunity to get tax affairs in order before HMRC comes knocking.”
In targeting residential landlords, HMRC recognises that there will be instances where individuals have either deliberately not declared rental income on let properties or made an honest mistake. This distinction is important when looking at what penalty might be imposed.
Barrat added: “HMRC is using increasingly sophisticated software to identify those who are not paying sufficient tax and the chances of going undetected are therefore diminishing. This campaign offers landlords the opportunity to come forward voluntarily and pay any unpaid tax, interest and penalties at a preferential rate.
“Landlords who continue to close the curtains and hide behind the sofa can expect HMRC to find them and enforce much stiffer penalties or even criminal prosecution.”