Letting Properties but not declaring them to HMRC?
If you are letting 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?
If you are familiar with the Self Assessment Tax Return section on Income from Property you will know that it even asks exactly how many properties the income relates to.
Sadly, some landlords think differently. I encountered one not so long ago. 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.
At THP we specialise in assisting Landords with all matters in connection with tax. For more details please have a good read through the Buy To Let section of our website which you can find here.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.