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Landlords Targeted

/ 25 February 2013

Myfanwy Neville

HMRC is targeting residential landlords as part of its quest to uncover individuals attempting to evade tax.

It has announced a campaign, starting in March, to ensure that anyone who has sold a second home – including holiday homes or buy-to-let investments – has fully paid capital gains tax.

It is also targeting domestic landlords using information from local councils to track down landlords who may be evading tax by failing to declare rental income.

Source: Financial Times

We say: Psst! We’re going to let you in to a little secret. HMRC quite like the high-volume/low-return approach to gee up the Treasury’s coffers. After all, the small-fry don’t have high-fallutin’ tax barristers, and it’s usually just a case of an unsuspecting taxpayer not doing things properly, so no complex grey areas of legislation to contend with. Slap on some interest and penalties, and it starts to add up nicely for HMRC, thank you very much.

This drive is the latest in a line of campaigns by HMRC to encourage voluntary disclosure of rental income by landlords who may not be currently disclosing all or any of their income from property on their tax returns. People like Ms Josephine Average: not necessarily high-earning; on PAYE; and recently moved in with a partner, so currently letting out her old home informally to a friend, but not thought to ask for a tax return to record the income. You see how it could happen, right?….but it just doesn’t wash with HMRC. If you should be paying tax, you should know you should be, and it’s your business to make sure you do.

So, adopting a blanket-bomb approach, HMRC are busy writing to anyone who could even be vaguely considered a landlord, regardless of whether they already pay tax on, and declare all their property income, to encourage them to ‘go quietly’….

Now is the time to act if you’re worried, or have concerns that you (or someone you know) should be disclosing rental income, but currently aren’t. Okay, so we can’t make the tax go away, but we can make the process a lot less worrying, shoulder some of the stress, and make sure you only pay what you need to in tax and penalties. If you’d like to just chat through with someone, our experts in tax investigations and dispute resolution are on-hand…

All views expressed in the BKL Blog are those of individual contributors and may not reflect those of Berg Kaprow Lewis LLP

Myfanwy Neville

Partner, Property and Construction

T +44 (0)20 8922 9376

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