40,000 letters being sent to landlords suspected of tax dodging

Landlords face increasing scrutiny from HMRC to ensure they are paying income tax on rental profits and capital gains tax on the profits of sale of investment properties. HMRC suspect they are losing around £500m each year in unpaid taxes from landlords, and have launched a new campaign, the Let Property Campaign, to redress this. They believe there are tens of thousands of guilty landlords across the UK. So far, 5,000 landlords suspected of owing tax have been sent a letter asking for any amounts outstanding to be paid within 30 days. A further 35,000 landlords will be targeted over the next 4 months with the same approach.

A variety of sources are being used to obtain the names of suspected offenders. As an example, lettings agents are being asked to provide details of registered landlords, this information is then matched against HMRC’s records to check whether rental information has been included on the relevant tax returns. In addition to this, social media communications are monitored to spot people posting updates about the availability of holiday homes; and local councils are being targeted for details of any housing benefit payments, again, to identify secretive landlords.

To help explain the campaign in detail and provide support to landlords who have under-declared their rental income or capital gains, a new Let Property Campaign website has been launched. This explains how to understand if you may be at risk and strongly recommends making a voluntary declaration rather than waiting to be approached by HMRC.

According to the Telegraph, the wording in the letter is as follows: “HMRC has data related to landlords and is comparing this with what individuals have or have not told us. This letter is the first stage following that process as HMRC is aware you are a landlord who is letting property and that you may be liable for tax on any income. We need landlords to call us within 30 days of the date of this letter – so if you receive one, please act and respond. If you do not and our information indicates you have not declared or paid the correct amount of tax, we will take action which could result in you paying a higher penalty or you could face criminal investigation.”

Our advice to clients who may have underpaid tax on rental property is to discuss their situation with us as soon as possible and if necessary, make a voluntary disclosure. For more information, please contact Lesley Stalker by emailing las@rjp.co.uk.