HMRC Urges Landlords to Clean up Taxes
Some landlords fail to pay the correct amount of tax on their rental income. HM Revenue & Customs (HMRC) has revealed that there is £550m worth of tax missing from the private sector.
The Let Property Campaign aims to get this money back, and is targeting all landlords that have not paid the right amount of Income Tax in the last few years. Offenders can take advantage of a grace period, in which they can voluntarily come forward and thus pay a 20% fine. Those caught out will be ordered to pay 100%.
It is possible that those who are found to be deliberately dodging tax payments could be prosecuted. Kevin Power, who avoided paying £84,000 in tax, was sentenced to 12 months imprisonment.
HMRC state that they are not trying to be too tough on landlords, accepting that some may have not paid the right amount by accident. Accidental landlords specifically may find it difficult to fill out their tax returns, as they may not understand what counts as deductible, such as letting agent fees and landlord insurance.
An HMRC spokesperson says, “not every landlord who owes tax is deliberately trying to cheat the system”, adding that the campaign is “not about penalising genuine mistakes.”1
HMRC have claimed that the majority of those that have not paid the correct amount in tax are usually just a couple of hundred pounds out, and most of these landlords will not be fined.
If you could be affected by the campaign, contact HMRC as soon as possible. It could also be wise to hire an accountant who will manage your finances and complete your annual tax returns.
The private rental sector is rewarding for many, and some of those will try to take advantage of the system. The Let Property Campaign should find those landlords and reclaim the money, putting more finance into the economy and private rental market.