This article by the Property Wire on September 25th, 2013 reveals how private residential landlords are being advised to put their house in order as the UK's taxman has announced a crackdown on unpaid taxes.
It is estimated that around £500 million is owed by landlords in
unpaid tax and HMRC has launched a campaign to target buy to let,
student and holiday let landlords who it believes are underpaying or
deliberately not declaring rental income.
Residential landlords can expect a knock on the door during the Let
Property Campaign which builds on previous initiatives aimed at plumbers
and electricians, building contractors, takeaway restaurants, motor
traders and many other sectors that have collectively seen HMRC collect
over £800 million in unpaid tax.
The so called ‘amnesty’ will last 18 months and failure to come
forward could result in criminal proceedings. ‘All rent from letting out
a residential property or holiday home has to be declared for income
tax purposes,’ said Marian Wilson, head of HMRC Campaigns.
‘We
appreciate some people will have made honest mistakes, and some may not
be fully aware that the rent from a property is taxable, and that is why
it always makes sense to talk to us so we can help,’ she explained.
‘It
is always cheaper to come forward voluntarily and pay the tax you owe,
rather than wait for HMRC to come calling. Telling HMRC about your tax
liabilities is simple and straightforward, and help, advice and support
are available. The message for all landlords owing tax is simple; it is
better to come to us before we come to you,’ she added.
Stephen
Barratt, private client tax director at accountants James Cowper said
landlords should not be wary and take it as an opportunity to put their
tax affairs in order.
‘This campaign is designed to give
residential landlords the opportunity to come forward and disclose any
unpaid or under paid tax. This is a window of opportunity to get tax
affairs in order before HMRC comes knocking,’ he explained.
He
pointed out that in targeting residential landlords, HMRC recognises
that there will be instances where individuals have either deliberately
not declared rental income on let properties or made an honest mistake.
This distinction is important when looking at what penalty might be
imposed.
‘HMRC is using increasingly sophisticated software to identify those
who are not paying sufficient tax and the chances of going undetected
are therefore diminishing. This campaign offers landlords the
opportunity to come forward voluntarily and pay any unpaid tax, interest
and penalties at a preferential rate,’ said Barratt.
‘Landlords
who continue to close the curtains and hide behind the sofa can expect
HMRC to find them and enforce much stiffer penalties or even criminal
prosecution,’ he added.
The advice from the firm for residential
landlords who believe that they may have an outstanding tax liability is
not to approach HMRC directly without first speaking with an accountant
or tax adviser as HMRC is an increasingly tough negotiator and without
detailed knowledge of the tax system larger tax bills and penalties than
necessary might be charged.
It also says landlords should not ignore this clampdown as it is
possible that HMRC is already aware of landlords’ financial details.
Also, if HMRC make the first move because no voluntary disclosure has
been made, penalties can be expected to be more severe.
Article Source: http://www.propertywire.com/news/europe/uk-landlords-tax-crackdown-201309258276.html
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