Landlords are seen as a lucrative source of underpaid tax because of the data now available to HMRC.
HMRC’s “Connect” system has been in operation since 2017 checking data from various government and local authority databases. By cross referencing the information, Connect can identify property owners not living in a property, particularly where council tax is paid by someone else or where a benefit is being paid to someone other than the property owner. A simple comparison of Land Registry and Electoral Register data is often enough to trigger an investigation.
It has been pretty successful. 8,704 property landlords were investigated last year, and the income tax collected increased by nearly £38 million.
If you are a landlord and haven’t been declaring your property income, you should consider doing so. Penalties for a voluntary disclosure are much lower than penalties imposed if HMRC instigate an enquiry.
Fines for situations where HMRC start the enquiry can be up to 100%. In extreme cases, criminal charges can result.
Voluntary disclosure is treated much more leniently, particularly if HMRC can be convinced the non-disclosure was a genuine error.
We have experience in dealing with the disclosure process and negotiating with HMRC to keep penalties as low as possible. To discuss your property tax situation, contact our team today on 01509 816150 or via our website or by the form below.