News: 14th March 2014

Landlords targeted in latest HMRC underpayment crackdown

Landlords targeted in latest HMRC underpayment crackdown

HM Revenue and Customs (HMRC) has targeted residential landlords in its latest crackdown on tax underpayment. Buy-to-let landlords and owners of multiple homes will soon receive letters from HMRC requesting additional information about their rental income and other details.
 
It is reported that landlords in London, East Anglia and South Wales are coming under considerable scrutiny, particularly those who claim a Capital Gains Tax (CGT) exemption on the sale of a property under Principle Private Residence (PPR) relief.
 
Homeowners suspected of ‘flipping’ their primary place of residence in order to obtain PPR relief have been the subject of many HMRC challenges of late.
 
HMRC is asking landlords for information on the number of tenants, property addresses and other information. Landlords will also be questioned as to how they purchased the property, and whether or not they have a mortgage.
 
These moves are the latest in a spate of HMRC crackdowns on residential landlords. In October 2013, accountants began to warn that HMRC were chasing landlords more aggressively regarding their underpaid tax. The following month, they launched a campaign against such underpayment against so-called ‘accidental landlords’.
 
The Let Property Scheme campaign is designed to give landlords an “opportunity to bring their tax affairs up to date” and receive “the best possible terms to pay the tax they owe”.
 
The campaign is aimed primarily at residential landlords and requires full disclosure of unpaid tax in return for preferential payment terms.
 
Underpaying landlords of residential property who fail to disclose their full tax underpayments could face prosecution. You can find more information on the Let Property Campaign on the Gov.uk website.



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