HMRC launched the Let Property Campaign back in 2013 in the belief that 1.5million landlords had underpaid or failed to declare rental income resulting in underpaid tax of £500million.
Although statistics on how successful the campaign has been are hard to come by, HMRC confirmed that, by 2019, £85million, or 17% of the estimated underpaid tax, had been recovered.
Given the huge Government outlay as a result of COVID-19, it seems inevitable that HMRC will be under pressure to explore every avenue to collect additional tax.
It should therefore come as no surprise that we have seen evidence that HMRC are beginning to ramp up their enquiries into individuals that they believe may have not fully disclosed their rental income presumably in the belief that there is over £400million of underpaid tax still to be recovered.
As HMRC can charge penalties of up to 200% of the underpaid tax in the most serious cases of tax avoidance, any taxpayer in the position of not having declared rental income should notify HMRC of their undeclared income as soon as possible in order to limit potential penalties. It is also usually possible to agree to pay any unpaid tax over an affordable period rather than having to pay in one lump sum.
Given that part of the disclosure the taxpayer calculates the amount of the underpaid tax and suggests what the appropriate penalty should be, we would strongly recommend that any taxpayer needing to disclose undeclared rental income should seek specialist tax advice before contacting HMRC.
At Ascendis we specialise in helping landlords keep their tax bills as low as possible and have significant experience in making disclosures to HMRC on behalf of clients. If you would like a free initial telephone consultation to discuss your circumstances please contact us on 0161 359 4227 or email firstname.lastname@example.org.