HMRC is knocking on the doors of letting agents with statutory notices demanding details of rents they have collected on behalf of private landlords. According to HMRC close to 900,000 landlords across the UK haven’t declared their rental incomes, causing the treasury a loss of at least £550m a year.
With letting agents being forced to disclose details, landlords who don’t file their taxes or inflate claims for letting expenses to pay less tax will have to pay up or face higher penalties.
In support of landlords, HMRC has launched a Let Property Campaign which encourages landlords to come forward and bring their tax affairs up to date. However, landlords will still have to pay a penalty of up to 20% plus any tax and interest.
To be eligible for this campaign, a landlord will have to meet certain thresholds. Trusts and companies renting out a property, and people who deal in commercial property, are not eligible for this scheme. To check if you are eligible and to help you make the right decision about the action you need to take use this HMRC questionnaire.
If you need any advice on how to get your tax affairs up to date, right from filling the notification form and registering to calculation and completion of your tax return, please get in touch with your small business accountant in Welling now.
Letting agents will have 60 days from the date of receiving the notice to let HMRC know about the rents they have collected on behalf of those landlords that have used an agency’s services for the year ended 5 April 2013. Failure to comply will result in an initial £300 penalty and up to £60 a day for continuing to fail. And if a letting agency knowingly provides inaccurate information HMRC can charge a penalty of up to £3000.
As stated earlier, HMRC is actively tackling tax evasion on rental properties and if as a landlord you want the best possible terms we advise you to disclose voluntarily now instead of later.