Catching up with Landlords' Income Tax

As you may have seen or heard in recent advertisements, HM Revenue & Customs (HMRC) are stepping up their attempts to ensure that everybody pays the correct amount of tax.

A number of campaigns have been launched, the latest of which is their Let Property Campaign, which is set to run for 18 months.

Under the terms of the campaign, landlords who have previously failed to inform HMRC that they have received rental income may make a disclosure and get the opportunity to bring their tax affairs up to date with reduced penalties. 

It is estimated that there may be as many as 1.5 million such landlords, and as HMRC are now actively reviewing Land Registry data with a view to identifying them, it seems that the prophetic wording in their advertising may very well come to fruition.

The disclosure procedure involves self-assessing what is owed, including interest and penalties.

The calculation of penalties is initially along the lines of what is deemed appropriate, which may be as little as 15% (or even less) of the tax not previously paid over.  However, this is in the form of an offer and may or may not be agreed by HMRC.  Certain guidelines are given to reduce penalties to take into account factors of disclosure, co-operation and severity.

However, if penalties are levied on the basis of HMRC’s discovery, they can be based on as much as 100% of the tax not previously paid!  In view of this, coming forward and making a voluntary disclosure is strongly encouraged.

Although the campaign is not exactly an amnesty, the charges that will be levied on the basis of such a disclosure are clearly considerably less than might otherwise be the case.

If this campaign is relevant to you, and you need to make a disclosure, please get in touch with your usual Ward Williams contact or email jamie.roth@wardwilliams.co.uk