Beware HMRC’s Let Property Campaign
Mar 22, 2016
In March 2016 HMRC issued about 3,000 ‘Let Property Campaign’ letters to both UK resident and non-resident landlords who have failed to declare their rental income. This letter means that the investigation is “prompted” by HMRC, resulting in higher penalties applying if there is any underpaid tax. As the name ‘campaign’ suggests, if you are a landlord then this is a means by which you can correct your tax affairs with HMRC through following a set procedure, and HMRC are there to help and encourage you to get your tax affairs up to date.
So what do you do if you get a “prompted” letter? Firstly, don’t ignore the letter – this could result in a worse scenario where you are investigated under much stricter rules with possible criminal prosecution and higher penalties. Remember, if you receive this letter, HMRC already have information from a third party source that has indirectly informed them that you have a buy to let property and have received rental income. The next thing is, don’t panic – HMRC want you to put your tax affairs in order and are trying to help you get there with the minimum stress. You have 30 days from the date of the letter to let HMRC know that you are either intending to make a disclosure or that your tax affairs are in fact up to date. Once you have done that HMRC will write to you again. In this new letter they will let you know that you have 3 months from the date of that letter to provide them with details.
So what if you haven’t received a letter from HMRC but you do have undisclosed rental income? Our advice is, be proactive and notify HMRC first. The disclosure then becomes “unprompted”, the penalty falls into a smaller percentage band and the situation is easier to handle because you are in control. The first thing you should do is formally notify HMRC using their online Notification Form. HMRC will then write to you acknowledging your intention to disclose and give you 3 months from the date of that letter to provide them with all the details.
If you are already registered for self assessment, have filed your tax returns on time but have carelessly forgotten to include your rental income, then with an “unprompted” disclosure HMRC will only ask you to pay and disclose a maximum of 6 years. Whereas if HMRC have made a “prompted” disclosure, it will be much harder to convince HMRC that a simple mistake has been made and the law allows them to go back 20 years. Also, if you have not registered for self assessment and your disclosure is “unprompted” then HMRC can ask you to go back 20 years.
The team at Paish Tooth are here to help if you have any concerns whatsoever about undisclosed rental income. We have the expertise in house to see you smoothly through the Let Property Campaign process. As they say, a problem shared is a problem halved.
You can also protect yourself against the cost of most tax investigations by subscribing to Paish Tooth’s Tax Investigation Service. As well as providing financial protection it also offers the security of knowing that a potentially distressing situation will be fully handled by an experienced accountant, which is an invaluable and reassuring combination.