Landlord Tax Amnesty Fails to Deliver
A call for landlords to come clean and to stop avoiding tax on their rental profits appears to have fallen on deaf ears.
In 2013, HM Revenue & Customs urged 1.5 million landlords allegedly dodging £500 million in tax to make disclosures in return for lighter penalties under the Let Property Campaign.
But in six years, only 35,099 landlords have come forward, paying extra tax of just £85 million against an estimated £500 million outstanding yearly.
Only 81 of the landlords confessed to deliberately misleading HMRC. While another 971 said they could have taken more care over the tax filings.
The statistics came to light after a Freedom of Information request looking into HMRC’s Let Property Campaign from accountants Saffery Champness. James Hender, Head of Private Wealth at Saffery Champness, said:
“The tax system is becoming more complex and individual mistakes and misunderstanding can happen. Looking at the data, of the large number of taxpayers who stated that they had either failed to notify HMRC of their original liabilities or hadn’t taken reasonable care, many would likely have been unaware that they owed anything at all.
“According to HMRC’s estimates, there are clearly many more landlords who have additional tax to pay, but have yet to come forward. If this is the case, then these people would be well advised to contact the taxman sooner rather than later. HMRC has been tightening the net on non-compliance and there are increasingly few opportunities for taxpayers to mitigate the risk of an investigation.”
Making a Let Property Campaign disclosure
Let Property Campaign - annual disclosures
|Tax yield||0||£17.6 million||£25.2 million||£21.4 million||£21.1 million|
Source: Saffery Champness
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Tax is an aspect of residential property investment which is often overlooked. There are many twists and turns to consider at all levels, whether for income tax, capital gains tax or inheritance tax. It is vital to get the ownership structure right and ensure that all tax relief, allowances, and claims are made.