HMRC have chosen another opportunity for tax payers to come clean as to previously undeclared income... this time it is for landlords who rent out residential property.
This new initiative was announced on 19th September and apparently the company is to last 18 months. They are looking into those tax payers who have any type of residential lets, both in the UK and abroad, including holiday lets, student lets, and work force lets.
The carrot is that by contacting HMRC before they contact you, a lower penalty rate of 10% or 20% can be negotiated. The stick is that if they contact you, the penalties can be as much as 100% of the tax due, and "criminal prosecution where deliberate evasion has taken place".
HMRC have a host of available information on which they can rely to identify landlords who have either not declared any rents, or are not declaring all rents they received. This can be from other government agencies, local authorities, internet research and tip-offs from the public including disgruntled tenants!
Some landlords genuinely do not understand their obligations as far as tax payments and HMRC are concerned. For example, some landlords wrongly believe that the capital element of mortgage repayments is deductible and hence they have no tax to pay.
On the other hand, some may not realise that there are special types of property letting where the tax treatment is different to conventional property letting, for example rooms rented in the taxpayers home or furnished holiday lets.
As always, if you have any concerns or questions about this information, please feel free to contact us through any of our social media, or alternatively call 01234 301000.
All information is from HMRC or Francis Clark's article from 30/9/13
This new initiative was announced on 19th September and apparently the company is to last 18 months. They are looking into those tax payers who have any type of residential lets, both in the UK and abroad, including holiday lets, student lets, and work force lets.
The carrot is that by contacting HMRC before they contact you, a lower penalty rate of 10% or 20% can be negotiated. The stick is that if they contact you, the penalties can be as much as 100% of the tax due, and "criminal prosecution where deliberate evasion has taken place".
HMRC have a host of available information on which they can rely to identify landlords who have either not declared any rents, or are not declaring all rents they received. This can be from other government agencies, local authorities, internet research and tip-offs from the public including disgruntled tenants!
Some landlords genuinely do not understand their obligations as far as tax payments and HMRC are concerned. For example, some landlords wrongly believe that the capital element of mortgage repayments is deductible and hence they have no tax to pay.
On the other hand, some may not realise that there are special types of property letting where the tax treatment is different to conventional property letting, for example rooms rented in the taxpayers home or furnished holiday lets.
As always, if you have any concerns or questions about this information, please feel free to contact us through any of our social media, or alternatively call 01234 301000.
All information is from HMRC or Francis Clark's article from 30/9/13
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