Buy-to-let investors under increasing HMRC scrutiny
16th July 2013 | News
HM Revenue and Customs' (HMRC) annual revenue from buy-to-let income is up by more than 10 per cent following heightened scrutiny of landlords, which is only expected to intensify.
UHY Hacker Young, the advisory which issued the alert, revealed buy-to-let investors paid £2.02bn in income tax on their rental income in 2010/11, up 13 per cent from £1.78bn in the previous tax year.
The increase in the amount of money HMRC receives from buy-to-let investments – which contractors often acquire as an alternative or a supplement to a work-placed pension – demonstrates the growing examination of the sector.
In a bid to ensure property investors are not neglecting their tax obligations, HMRC has already formed two new dedicated taskforces in the South East and Yorkshire.
Additionally, HMRC is also running a 'property sales campaign', under which investors who have not yet declared a property sale – other than their main place of residence – are urged to speak out.
Mark Giddens, head of private clients services at UHY Hacker Young, said: "Once the deadline of September 6th 2013 has passed, we expect HMRC to become far more aggressive in pursuing undeclared rental income as well as property disposals.
"Buy-to-let investors need to be aware of HMRC's increasing concern about tax evasion by landlords. Their actions to date show that they are quite capable of matching Land Registry records and data from letting agents with taxpayer files and picking out discrepancies.
"[And] as buy-to-let increases in popularity, there is inevitably more for HMRC to investigate. Some might simply fail to understand what their liabilities are and how to calculate them properly; others might think that they will be below HMRC’s radar."
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