Landlord News

Taxman Targets Landlords

Em Morley - June 14, 2012

An investigation targeting tax evasion from landlords has been announced by HM Revenue & Customs (HMRC). The announcement, promising to recover up to £17m in unpaid taxes, is due to begin shortly. Despite this, it is unclear what has prompted the investigation.

Confusion

The original announcement stated: “A new taskforce to tackle tax evasion on property transactions was announced today by HMRC.”[1] This sparked confusion in some quarters, as the title of the piece, HMRC targets property rentals, then refers to transactions commonly used in sales and not lettings.

Taxman Targets Landlords

Taxman Targets Landlords

A large taskforce

The scheme is firstly focusing on private landlords in a number of regions, including East Anglia, London and Nottingham. If successful, the scheme can be rolled out across the UK.

Stephen Barratt, Private Client Director at James Cowper, believes that the net is tightening on landlords that have been unscrupulous regarding tax. Mr Barratt said: “Landlords can reasonably expect HMRC to gather information from across Government departments and many other sources including press and internet advertisements, universities and colleges.”[1]

Barratt went on to say: “Increasingly sophisticated techniques,” employed by the Government mean that those paying insufficient tax going undetected are “rapidly vanishing.”[1] James Cowper believes that on top of looking unpaid tax, HMRC will also look to recover unpaid VAT.

Unaware

It can be suggested that the scheme will uncover landlords who were simply unaware that VAT is charged on certain properties. These types of landlord are thought to be those who offer temporary accommodation, for example to seasonal workers or students. In these instances, the landlord may not be registered for VAT when they should be and therefore could be facing a backdated claim.

Advice

James Cowper has offered advice to those landlords fearing that they may owe outstanding tax. This advice includes not approaching HMRC directly without speaking with a tax advisor. Furthermore, the firm has appealed to landlords to not simply ignore the crackdown, saying that HMRC is already likely to be aware of those landlords in arrears. Any attempt to rebuff payments could result in a more hefty fine.

[1] http://old.lettingagenttoday.co.uk/news_features/Taxman-goes-after-landlords-but-drops-no-clues