HM Revenue & Customs is on the trail of any landlords and property investors who might not be paying all the tax they owe by trawling the nation’s property listings.
HMRC sifts through Rightmove and Zoopla and crosschecks the rental prices on the portals’ listings against tax returns, council tax bills and Land Registry data as part of the government’s Let Property Campaign. The Let Property Campaign is aimed at helping landlords of UK properties get up to date with their tax affairs.
Zoopla has said that it has no involvement in this tax analysis, but didn’t want to comment further, while Rightmove remained tight-lipped on the subject.
HMRC has been “particularly active” in identifying tax-avoiding landlords
National accountancy firm UHY Hacker Young identified HMRC’s use of the property portal listings to pick up irregularities and also said that the government body had been “particularly active” in its search for landlords who weren’t paying as much tax as they maybe should.
Inspectors have netted almost £18 million in unpaid tax
The Let Property Campaign tax inspectors email buy-to-let landlords who are suspected of not declaring or avoiding tax on their rental incomes to warn them about the consequences of their actions. According to UHY Hacker Young, the campaign has encouraged many landlords to come forward and declare unpaid tax, especially if they might face a tax investigation otherwise.
The campaign has, in the last year, netted £17.7 million in additional tax for HMRC.
Caught in the cross (referencing) hairs by HMRC
UHY Hacker Young says that HMRC’s Connect AI system seeks out the right targets for the campaign by cross-referencing data.
The buy-to-let market is, according to UHY, rich pickings for HMRC when it comes to unpaid tax and the amounts already collected from the landlords coming forward prove this estimation.
Landlords could face prosecution by failing to declare tax
Landlords could face prosecution or even prison if they fail to declare the right amount of rental income or to pay Capital Gains Tax on the sale of any buy-to-let properties.
It seems, then, that coming forward to set their records straight is the best course of action for buy-to-let landlord.