Introduction
The Let Property Campaign, established by HMRC, offers a long-standing opportunity for residential property landlords to update their tax affairs, thus avoiding penalties and interest. This initiative allows individuals to disclose previously undeclared rental income, with HMRC offering reduced penalties compared to what may be imposed if they discover the omission. Failing to declare rental income can result in severe penalties, often due to unintentional oversight.
Accidental landlords, those acquiring a second property by chance, are now seeking help to rectify years of unreported rental earnings. Many were unaware of their tax obligations, assuming their employer’s PAYE system covered everything. Others may have naively rented to friends at non-market rates or mistakenly relied on letting agents to handle their taxes.
Prior to 2013, the only options for those realizing their tax errors were to hope HMRC wouldn’t find out or voluntarily report the oversight.
How HMRC Detects Undeclared Rental Income
HMRC gathers information from various sources, such as Land Registry, letting agents, local authorities, mortgage applications, utilities, and anonymous tips. HMRC employs the robust Connect tool for data analysis, detecting taxpayers underpaying tax and encouraging participation in the Let Property Campaign.
Why Use the Let Property Campaign
HMRC faces constant pressure to increase tax collection and has received more funding and powers. They focus on pursuing undeclared income, with landlords being a key target due to their accessibility. HMRC will reach out to landlords they suspect of not disclosing all their rental income and may conduct compliance checks or inquiries, eliminating the option to use the Let Property Campaign. To avoid penalties and resolve matters proactively, voluntary disclosures are strongly recommended. This can help HMRC view the issue as a mistake rather than a more serious offense and reduce the years covered by the disclosure.
Property Tax Specialist Services
Property tax specialists can guide clients through the Let Property Campaign process, often reducing penalties. Fees are determined based on the number of years to be declared and available records.
Conclusion
If you’re concerned about approaching HMRC regarding undeclared rental income, reach out to a professional team who can offer expert advice and guidance throughout the process. Don’t wait until HMRC contacts you, as early disclosure is often more favorable in resolving tax matters.
