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  • Tax

    Research highlights landlord tax evasion



    Fresh research conducted by accountancy firm UHY Hacker Young has found that many buy-to-let landlords are avoiding paying rental income tax.

    In Nottingham (NG postcode area), for instance, the percentage of landlords admitting to not paying tax on their rental income has increased 245% over the past year, according to the study.

    On a list of the highest concentration areas across the UK of buy-to-let landlords admitting to rental income tax avoidance, Nottingham is ranked third, following Leicester at second and Birmingham in first place.

    Simon Browning, partner in charge of UHY’s Nottingham office, said:

    “These figures show that HMRC sees the buy-to-let market as a source of hundreds of millions of pounds of unpaid tax. The amounts collected just from landlords coming in from the cold suggests they may not be too far wrong with those estimates.

    “Mounting pressure on buy-to-let landlords from HMRC’s Let Property Campaign has driven this sharp increase. The Let Property Campaign aggressively mailshots buy-to-let landlords that are suspected of avoiding paying tax on their rental income warning them of the consequences of tax evasion.

    “Buy-to-let landlords have been prosecuted and jailed both for under declaring rental income and for failing to pay CGT on the sale of buy-to-let properties. Considering the risks of big fines and criminal prosecutions landlords are doing the right thing by coming forward to HMRC and declaring unpaid taxes.

    “While establishing and prosecuting a tax fraud involves a lot of hard work by HMRC they’ve made it clear that this is a route they will go down. The paper trail that exists with most property lettings makes it relatively simple for HMRC to show when tax is not being paid.”

    Full/source article

    If you are not paying tax on your rental income, I fear you are living on borrowed time and you would be well advised to contact your accountant and ask to make representations under the Let Property Campaign, where there are certain concessions for those who voluntarily come forward.

    PropertyTribes' tax partner, Rental Income Tax Advisors, are specialists in landlord and property tax and have been supporting the PT community for many years. They can help with getting your tax affairs back on track, so click the banner at the top of the thread for more information or to contact RITA.

    SEE ALSO  -          HMRC Let Property Campaign ramping up

    UP NEXT -              Let Property Campaign Disclosure

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    I regularly get generic e-mails from HMRC about declaring UK property income.  Which is fine, but I already am.  The ones they need to target have probably never got an e-mail from them as they aren't registered as self employed in many cases.

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    I also regularly get those HMRC emails and I have always declared everything.

    I imagine the under-the-radar landlords will be the ones who are letting properties on residential mortgages and may not be members of RLA etc and may not be up to date with required standards and regulations (or S24 for that matter).

    Not an easy job to track them down I wouldn't think.

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    All comments are made in good faith and are given to the best of my knowledge and experience but I would advise you to consult an expert before making important decisions and I accept no liability for comments made.


    It's getting easier and easier to track them down as government get access to more data that can provide indicators of a rental property.  Mortgages certainly aren't the only way to detect rental property.

    While detection (and hence lots of letter and email sending) is fairly easy, I suspect putting together court-proof evidence, etc is still quite time consuming.

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    should be relatively easy, given that government runs HMLR...

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    RITA has just informed me that their record was last summer – 14 properties, and 24 years….all undeclared!  RITA put the accounts into HMRC and they accepted them i.e. did not go for fully blown investigation.

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    With more data being more easily connected, both within government and outside, hiding rental income will very soon be impossible.

    Just basic land registry records would detect a lot - eg where the owner address is not the property address.

    Add in mortgages, licence schemes and the like, it's then pretty easy to confirm a rental property and track it to an owner.

    Even with no mortgage or licence though, it's still getting easier for government to detect or confirm rental properties - whether it's from occupier change patterns (council tax, electoral register, etc) or via credit reference records showing property occupiers are renters.

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    Hi Simon.

    After my response to a consultation by the HM Treasury last year, I have seen this year that the Let Property Campaign have now included live in landlords in their scope to recoup and clampdown on taxes from room rentals also. My question to you is, what ways do you think they can identify a lodging with next to no data being shared by flatsharing sites. No licence requirement, no references being made.
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    The easiest is probably the electoral register, both the extra people and the (probably frequent) churn in people.

    Most lodgers will also update their employer (ie PAYE records); plus bank accounts and other services, leaving similar traces with credit reference agencies.

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    There’s a huge gulf between what could be done and what actually is,

    There needs to be legislation that allows hmrc, councils, even private companies to collate and compare

    Mortgage data
    Benefit claims
    Hmrc records
    Land registry
    Council tax
    Nhs records
    Credit rating agencies
    Mobile phone and internet contract data
    DVLC

    Then let them loose any agency that identifies untaxed buy to lets collects 25% of the fines and back tax raised.

    This thread ties in with my comments on the usual suspects in DL’s thread about the number of landlords unaware of section 24.




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    I hope this thread is referring to tax evasion and not tax avoidance!
    I'm very happy to be able to avoid paying tax, I've no need to evade paying tax.
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