Property investors who have failed to declare their rental income or have omitted to disclose any capital gains on the sale of a second property are coming under scrutiny from HMRC, warns Yorkshire based chartered accountancy firm Clough & Company.
Nigel Westman, partner at Clough & Company, said: “This tax campaign appears to be at the very forefront of HMRC’s line of enquiries. HMRC is of the opinion tens of thousands of landlords are failing to declare their rental income or capital gains.”
Over the last three years HMRC has been gathering information from the Land Registry, Electoral Roll and various other sources and earlier this year sent notices to letting agents asking for details of all the landlords and property owners they acts for. Nigel adds: “HMRC has also been monitoring housing benefit payments through the local council’s records and further information has also been gained through a review of various social media sites.
“In October last year a tax campaign was launched asking people to voluntarily declare any omissions from personal tax returns but this strategy failed to elicit the expected number of responses.”
Letters are being sent to around 40,000 landlords inviting them to contact HMRC.
Nigel added: “Anyone who has received such a letter has been given 30 days to respond and if a taxpayer fails to do so, and the information in HMRC’s possession indicates they have not declared their true income or failed to pay the correct amount of tax, they will take action. This could result in the payment of a higher tax penalty or even a criminal prosecution in some extreme cases. We would therefore advice anyone who receives such a letter to take immediate advice.”