Let Property Campaign – HMRC Targets Private Landlords

It is well publicised that the Government is committed to cracking down on tax avoidance and evasion, in order to plug the “tax gap” i.e. the amount of tax that should be paid, according to HMRC, and what is actually paid.

HMRC have been sending out a number of “nudge letters” to taxpayers who they feel “may” have paid insufficient tax. These letters can refer to a number of different tax matters, including online traders, overseas income and gains, capital gains tax on property disposals and private landlords who have not fully disclosed their rental income.

To assist them with their aims to collect the “right” amount of tax from private landlords, HMRC opened the “Let Property Campaign” in 2013.

This campaign provides an opportunity to bring your tax affairs up to date if you are a private landlord letting out residential property in the UK or abroad and to get the best possible terms to pay the tax you owe (on undisclosed rental income).  Under the campaign you will need to tell HMRC about the income you haven’t declared by making a full voluntary disclosure and then calculate and pay any outstanding tax within 90 days of notifying HMRC of the intention to participate in the campaign. Interest and penalties are also payable.

This campaign is available to be used by all private landlords, including those who let property out in what would be classed as the traditional method (possibly via a property agent) and those who operate short-term property lets (typically using property sites such as AirBnB, VRBO etc.).

The penalties imposed by HMRC for an unprompted disclosure under a tax campaign are more lenient than those applied where either (a) you are prompted by HMRC to make a disclosure (i.e. by way of a “nudge letter”) or (b) a tax payer decides to ignore their obligations entirely.

Given the above, it is in an individual’s interest to enter into the Let Property Campaign voluntarily.

If you wish to discuss the issues raised in this article, please feel free to contact Tom Kirk at property@wardwilliams.co.uk.