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For those landlords that have not been keeping their tax affairs up to date and in order .... HM Revenue & Customs has spent years and £100m or more on a super-computer designed to identify those who may have paid too little tax. And now – with the deadline for filing 2015-16 tax returns just weeks away – the system is being fully deployed for the first time.
Instead of relying solely on information provided by taxpayers via their returns, HMRC’s powerful “Connect” system now draws on information from myriad government and corporate sources to create a profile of each taxpayer’s total income. Where this varies from the information provided by the taxpayer, the account is flagged and could be subject to further investigation.
For the first time, HMRC is also using these powers to warn individuals to check that they have not underpaid.Last month it sent letters to 10,000 individuals who had submitted their 2014-15 tax return without a complete declaration of savings interest received.
HMRC said it had used information gathered from banks, peer-to-peer lenders such as Zopa and other financial institutions and then checked it against individuals’ tax returns. It sent letters to those with discrepancies.
A spokesman said: “We have written to customers who appear to have under-declared untaxed interest.”The Connect system’s data-hoarding does not stop at the income people have received from work and investment.
“Connect broadly deals with information spontaneously available in government departments or as part of the digital footprint that people leave when they use the internet,” said George Bull, senior tax partner at RSM, the auditing and consulting firm.
“We all leave a massive electronic footprint of where we are, when we are away, what we do and what we spend.”
The Connect system crunches data from Airbnb, the rental platform, for instance, or eBay.Full/source story PREVIOUSLY - Tips for landlord self assessment tax returnsUP NEXT - HMRC "Let Property" campaign extended for 4 years!DON'T MISS - Buying a property in limited company structure ...NOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
If I remember a few years ago HMRC also introduced a service in which lenders can pay £3 to get income data on an applicant, to help identify and prevent fraud.
They also have data from the Benefits Office on the LHA that is paid to a landlord - whom and how much.
In addition to Letting Agents having to complete a regular annual return outlining landlords, tenants, properties and income from each.
Then we have the HMRC Crackdown on Landlords that has been going on for a few years now?
When it comes to HMRC and Property Investors - you need to get it right and get it documented. It is certainly an area in which HMRC are very interested, not only because they can raise bills but they know you have assets/equity in which they can force you to pay. Unlike many other areas - say companies and assets or low income households and lack thereof.
_________________________________________________________________________The above post is not financial advice, its often me rambling - passing time on a coffee break.If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance._________________________________________________________________________
Well said Adam. HMRC are at the top of the list to get paid and they can force bankruptcy if necessary.Play it with a straight bat and the computer's alogrithm won't spit you out to be "looked at" by a human!
If this computer is so clever then how come it hasn't detected all the LL breaching their mortgage conditions and renting to HB tenants and also those let out their resi property without CTL.
All illegal income and nothing done about it
Because if it was stopped there would be millions of homeless tenants and quite a few bankrupted LL and homeowners
If you have normal circumstances this computer is nothing to worry about.
Cash can still circumvent what it looks for
Oh and pre paid debit cards which don't have to appear on credit files!
That is not so much HMRC business Paul but they are not breaking the law but a commercial contract.
Not like lenders need HMRC in any event - so many crumbs are left in which to catch people breaking the law. Something as simple as tennant getting Sky installed at the property not in applicants name, data that credit reference agencies may be willing to provide.
I was thinking more about the income not being taxed or being the proceeds of crime as being in breach of mortgage conditions is fraud.
Surely any person obtaining a mortgage which has specific conditions attached to it and then is not complied with is obtaining a financial product by deception. But of course that will be for lenders to take action if they choose.
Plus I'm sure any such usage if it was discovered by lenders would be marked on the National Hunter database as fraudulent mortgage applications.
I'm amazed they haven't implemented this before. It's not hard to mash the data together and come up with flags for investigation.
Rachel RoodhardtFolkestone Estate Agent