As HMRC finally start to catch up with ‘business as usual’ matters post covid, we have found an increase in landlords coming to us after receiving a letter from HMRC about undisclosed rental property income.
Why am I getting a letter now?
Back in January 2023 HMRC had a huge clamp down on tax evasion, in particular by people who receive extra cash on top of their main income though the use of certain online digital platforms. These platforms have now been ordered to give HMRC users’ information. This had a huge impact on the holiday rental market in particular but it does not stop there. HMRC have a range of ways to sniff out landlords with undisclosed rental property income.
- Gathering information from HM Land Registry
- Stamp Duty tax returns
- Reviewing reports from lettings agents and tenancy deposit scheme providers
- Carrying out online searches
- Receiving reports from members of the public
- Collecting information from other government departments, such as the electoral register
Combine all of these various methods with the HMRC’s ability to review up to 20 years of your information it is no surprise that landlords are finding themselves in hot water.
What happens if I do not disclose this income to HMRC?
Not disclosing rental property income is classed as a criminal offence by HMRC and in its worst case, can result in a criminal investigation. Penalties for undisclosed income can be hefty, ranging from 10% and rising to 100% of the rental income in some cases.
I have undisclosed rental income but have not received a letter from HMRC. What should I do?
To many people the thought of holding your hands up to HMRC and admitting you are at fault is terrifying. However the worst thing you can do is nothing. HMRC most certainly WILL catch up to you at some point in the future. Therefore getting ahead of the game and speaking with a professional such as an accountant who can correctly calculate the tax you owe, and help to mitigate any repercussions is of paramount importance.
I have already received a letter from HMRC telling me I have undisclosed rental income.
Again, the worst thing you can do is bury your head in the sand and hope it all goes away. It will not. It is important you seek out the help of a professional who will be able to guide you through the process, calculate the tax you owe and help mitigate any repercussions before the situation gets any worse.
HMRC Let Property Campaign
The Let Property Campaign is an opportunity for landlords who owe tax through letting out residential property, in the UK or abroad, to get up to date with their tax affairs in a simple way and take advantage of the best possible terms.
If you’re a landlord and you have undisclosed income, you must tell HMRC about any unpaid tax now. You’ll then have 90 days to work out and pay what you owe. Please see HMRC’s website for more information on the Let Property Campaign.
How can Onyx help?
We understand approaching a professional can be daunting, however we are here to help and not judge anyone. We can review income and expenditure from your property or properties and submit any retrospective self-assessment tax returns in the line with the affected tax years. We can then offer you support with self-assessment tax returns going forward ensuring you continue to declare your rental income correctly in the future.
GET IN TOUCH WITH ONYX
Do you require assistance with undisclosed rental income? Would you like help completing a self-assessment tax return? Our tax team are on hand to help if you have any queries regarding information in this article. If you want to discuss further, please give us a call or e-mail us at email@example.com for a FREE no obligation consultation.
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Call us on 0121 753 5522 or 01902 759 800. We look forward to hearing from you!