The ‘prompted letter’ provides landlords with undeclared rental income a 30-day window to make contact, and then a further 3 months to regularise their tax affairs.
Those who DO NOT take this opportunity risk being investigated under Code of Practice 8/9, facing much higher penalties (potentially up to 200% of any tax due) and the possibility of a criminal prosecution.
HMRC rely on a wealth of available information to identify landlords who have not declared rental income.
HMRC’s state-of-the-art analytical computer system ‘Connect‘ draws on information from a range of government and corporate sources, including HM Land Registry and the Tenancy Deposit Scheme, to create a profile of each taxpayer’s total income.
According to the data released by HMRC, the highest concentration with landlords with undeclared rental is Birmingham, with Leicester ranking second. South East London ranks as London’s top spot.
Letting agents have also been sent statutory notices demanding details of rents collected on behalf of private landlords. An initial fine of £300 applies to those agents failing to meet the initial deadline, with a potential further fine of £60 per day for ongoing failure.
Paul has 35 years of experience in tax starting at HMRC. Paul provides specialist advice to private individuals under an HMRC tax investigation or those wishing to make a voluntary disclosure.
Ian is a Chartered Accountant who has specialised in tax since 1985. He advises on tax investigations and has helped many clients resolve their tax position using HMRC disclosure facilities.