HMRC recently revealed some of the most common tax errors that residential property landlords make, however unintentional they may be. The Let Property Campaign provides these landlords with the opportunity to get their tax affairs up-to-date and minimise any penalties.
What is the Let Property Campaign?
HMRC’s Let Property Campaign provides a facility for landlords
to report previously undisclosed rental income. Voluntary disclosures made under the ongoing scheme will result in an offering of ‘the best possible terms’ for the correction of tax affairs.
The campaign is open to all individuals who let out single or multiple residential properties in the UK or abroad including, for instance, those who are:
■ renting out a room in their own home and exceeding the Rent a Room threshold (£7,500 per year in 2017/18)
■ living in the UK and renting out a property abroad
■ renting out a holiday home
Please note that the scheme is not open to companies or trusts renting out residential property, or to those who are renting out non-residential property.
Making a disclosure
To take part in the Let Property Campaign the individual, or their adviser, will need to notify HMRC of their intention to make a disclosure. They will then have 90 days in which to inform HMRC about all previously undeclared income, gains, tax and duties. Full payment is required at the same time as the disclosure, although in some circumstances a staggered payment plan will be agreed.
When calculating the penalty, HMRC will consider the level of co-operation, the time taken to correct the non-compliance and the accuracy of the information provided. However, in all cases the tax arrears will still need to be paid.
Avoiding the common mistakes
HMRC recognises that many landlords do not deliberately attempt to mislead the tax authority, rather they may just be unsure of their tax obligations. This is particularly common amongst those who have not intended to become landlords – for instance renting out a property after a divorce or a change of work location.
If you believe that you have undeclared income, it is always better to notify HMRC voluntarily rather than waiting for them to contact you. We can make a disclosure on your behalf and calculate any tax owed – please contact us for details.