Insights

HMRC has recently turned its attentions to property owners and investors with the launch of new taskforces and initiatives to recover additional tax revenues. Firstly, aimed at buy-to-let landlords in the South East, HMRC currently has a taskforce monitoring the activities of landlords whose self assessment tax returns may not reflect the value of their property portfolios. If you have rental property and think you may have underpaid tax, please seek professional advice. This particular initiative is not accompanied by an opportunity for landlords to avoid penalties for outstanding tax owed and any declarations should be treated with caution to avoid further enquiries being opened.

Also aimed at property owners, more recently, on March 5th 2013, HMRC unveiled its Property Sales Campaign (PSC). This is aimed at taxpayers who have sold or disposed of second properties either in the UK or abroad and not reported their tax liabilities to HMRC properly. If these circumstances apply to you, the PSC then requires you to disclose any other undisclosed income or gains. This can either relate to the property which is the subject of the disclosure or it can relate to entirely separate business interests.

Operating as an Amnesty in the same way as previous initiatives, any taxpayers who are affected by the PSC have been given until August 9th 2013 to notify HMRC of their intention to participate. They then have until September 6th to make a full disclosure and pay any tax due.

Not all property owners will be eligible to use this facility. The PSC is restricted to property owned by an individual. Companies, partnerships and trusts cannot use the disclosure facility; neither can individuals who are in the business of property development.

If you think you might need to take advantage of the PSC to rectify any omitted property transactions you have the added benefit of being able to set your own penalty charges (subject of course to HMRC review) and the potential to pay any outstanding tax via installment arrangements.

• No penalty payable for genuine mistakes (for this to apply you would need to be able to demonstrate that you took reasonable care in dealing with your tax affairs)
• Careless reporting will attract a 30% penalty on the total amount of tax outstanding
• Deliberate tax evasion will attract the maximum penalty level of 100% of tax outstanding and in the case of assets and income from overseas property this increases to 200%.

To understand whether this campaign might apply to your own circumstances, it is worth seeking specialist advice. If these circumstances apply to you there is still the opportunity to take advantage of the Liechtenstein Disclosure Facility instead of the PSC, but this is likely to apply to a minority with very complex affairs or where there are large amounts of tax at stake.

To find out more about using HMRC’s PSC disclosure facility please contact Anne Eager by emailing ae@rjp.co.uk.