Does HMRC Compliance Checks Apply to Rental Income?

HMRC’s Compliance Team takes a keen interest in landlords who may not be declaring their rental income. A campaign which began in 2013 known as the ‘Let Property Campaign’ indicated HMRC’s intention to tighten up on lost income from this area. Aware of some £500 million annual unpaid tax income from rental property, HMRC figures suggest that someone in three landlords is failing to declare accurate figures. HMRC’s handy Let Property Questionnaire is designed to help landlords become aware of the responsibilities.

Disclosure Under the Let Property Campaign

The idea of the Let Property Campaign is to give landlords who may not have been tax compliant a chance to put their tax affairs in order while avoiding a penalty completely, or at worst a heavily reduced fee (roughly 20%). After informing HMRC of any unpaid tax, landlords have a 90-day window to calculate and pay what they owe.

The Let Property Campaign is specifically targeted at residential property landlords with:

  • multiple properties
  • single rentals
  • student for workforce rentals
  • holiday lettings
  • those renting out a room in their main domicile at a rate beyond the rent a room scheme threshold
  • those landlords who live abroad for more than six months.

The campaign does not include those landlords who rent out a shop, garage or lock up.

A key feature of the HMRC property company is that there is no disclosure window, meaning there is no date by which landlords come forward before the scheme closes.

How does HMRC’s investigate non-disclosed rental income?

Backed by the daunting power of its supercomputer ‘Connect’, HMRC has made it clear that rental activity is very much in its sights when it comes to targeted compliance activity. This means that compliance checks are on the increase and that any payments made to or from landlords will be heavily scrutinised. Penalties for non-disclosed rental income are higher than those offered by the terms of the Let Property Campaign. These penalties may reach up to 100% of the unpaid liabilities or, when related to offshore income, up to 200%. HMRC has been known to instigate criminal investigations in extreme cases.

Need Help?

If you have substantial tax arrears or penalties and cannot pay them, call 08000 746 757 as we can often help with an HMRC settlement.

Read more about HMRC Tax Problems

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