HM Revenue and Customs (HMRC) is intensifying its efforts to uncover undeclared income tax from buy-to-let landlords, with an 83% surge in cases during the 2022/23 tax year. The Let Property Campaign, initiated by HMRC in September 2013, originally aimed to tackle the issue of up to 1.5 million landlords failing to report rental income, amounting to a substantial £500 million annually.
Despite its initial plan to operate for just 18 months, the campaign has now been in operation for a decade offering a great number of benefits to those who participate in it. In the past year alone, HMRC identified an additional 5,429 landlords who had not fully disclosed their rental income in their self-assessment tax returns.
In total, HMRC successfully recovered an additional £33 million in undeclared income tax, averaging £6,078 per landlord. This marks a significant 73% year-on-year increase from the £19.3 million recovered in 2021/22.
Understanding HMRC's Authority and Penalties Under the Campaign
Under the campaign's provisions, HMRC is authorised to recover undeclared rental income for up to 20 years and impose fines of up to 100% of the outstanding tax, or even 200% in cases involving offshore irregularities. In certain instances, criminal prosecution may also be pursued, particularly for those found to have deliberately evaded paying income tax on their rental income.
In contrast, landlords considered to have made genuine accounting errors face more lenient fines, and HMRC will only reclaim up to six years of undeclared income tax in less severe cases. To avoid the worst-case scenario, read our article on let property campaign tips to help ease your worries.
An HMRC spokesperson confirmed that the Let Property Campaign has renewed its focus now that the worst of the Covid-19 pandemic appears to be behind us. The spokesperson stated, "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, straightforward way and take advantage of the best possible terms. During the Covid-19 pandemic, resources were moved to support the wider government's priorities at the time, which resulted in a temporary reduction in the number of disclosures made."
Let Property Campaign's (LPC) Penalty Calculator
Stay ahead of the competition and know the applicable penalty amount in your Let property campaign.
Strong Encouragement for Landlords: Promoting Voluntary Disclosure
Landlords are strongly encouraged to voluntarily disclose any suspicions of undeclared rental income as the let property campaign penalties can be heavy. This proactive approach enables a swift resolution of potential tax issues through the Let Property Campaign, offering a straightforward and advantageous process. Upon making a disclosure, landlords are provided with a 90-day window to calculate and settle any undeclared income tax, with access to professional support throughout.
If you are looking for professional help to declare your property income, UK Property Accountants is at your service. UK Property Accountants can offer valuable assistance in ensuring landlords maximise their entitled reliefs and expenses, facilitating accurate compliance with tax obligations.
- UK Autumn Statement 2023 Unveils Sweeping Tax Reforms and Business Boosts - 22 November 2023
- Autumn Statement 2023: Tax Cuts, Business Measures, and Economic Growth - 22 November 2023
- Unlocking the Value of Property Accountants in Real Estate Finance: A Detailed Exploration - 22 November 2023