Letting properties without telling the taxman? He’s scouring the Land Registry for your name…
If you let properties to tenants, one of your first steps is likely to be to tell the taxman all about it. After all, you don’t want him slapping you with a chunky fine that all but wipes out your rental income, do you?
Sadly, some landlords think differently. I encountered one recently. She owns two properties, but she lives in neither of them. She was worried because she’d just received a letter from HMRC that kicked off with this line:
“Information from the Land Registry suggests that you may own more than one property.”
In other words, the taxman had clearly been scouring the Land Registry records to find evidence of landlords not disclosing their income. He enclosed a questionnaire for the landlord to complete so she could bring her tax affairs up to date.
Unfortunately, because HMRC identified the anomaly in this person’s tax affairs, she now has to make a prompted disclosure. In other words, the taxman will take the view that her non-disclosure was deliberate, disqualifying her from making a voluntary disclosure via the Let Property Campaign.
Had she been able to make a voluntary disclosure via this campaign, it would have offered her significantly lower penalties. Indeed, she may have faced a penalty of only 10% of the undisclosed property income. Now that figure will fall in the range of 30% to 70% – a major hit when you consider she has let the two properties for a decade.
If you also receive undeclared rental income, our strong advice would be to make a voluntary disclosure using the Let Property Campaign. If you don’t, it’s clear the taxman is sifting Land Registry records for owners of at least two properties. It’s only going to be a matter of time before he gets to you.
That’s not all. HMRC now gets regular information on lettings and landlords from local authorities, letting agents and mortgage lenders. And that’s before you factor in the chance of disgruntled tenants, jealous individuals or anyone else tipping them off as well.
So whether you need to make a voluntary disclosure or the taxman has already come knocking, get the property tax experts at THP on your side now. If you don’t, there could be a lot of money at stake as penalties loom large on the horizon. Talk to us today – it could literally save you tens of thousands of pounds, or even more.