Long awaited HMRC crackdown on buy-to-let investors starts
- Hundreds targeted in first wave
The long awaited HM Revenue & Customs (HMRC) crackdown on buy-to-let investors has now begun warns Wilkins Kennedy, the accountancy firm.
HMRC is currently sending letters to hundreds of individuals that it believes own buy-to-let properties but who have failed to declare these property investments to the taxman in self-assessment returns.
According to Wilkins Kennedy HMRC has been gathering lists of landlords from lettings agencies for years but until now it has not launched a concerted compliance campaign against those individuals.
The letters from HMRC ask taxpayers and their tax advisers for details on their property investment activity going back six years and request a detailed breakdown of costs such as repairs and professional fees.
Says Peter Goodman, Senior Tax Partner, of Wilkins Kennedy: “There has often been speculation that HMRC would start a compliance drive against landlords but up until now, enquiries have been pretty piecemeal. This is a real change in tactics for HMRC.”
“Individuals who receive these letters need to take them seriously. If they do owe tax they should consider early disclosure as part of a negotiated settlement. This may reduce the penalties they incur. People who refuse to cooperate with HMRC on this could ultimately face criminal prosecution.”
“Rising rents over recent years means that even highly geared buy-to-let investors may be making a profit from their investments that they need to pay tax on. The unpaid capital gains tax on sales of buy-to-let investments, which have not previously been disclosed, could also be huge.”
“As well as the possibility of an initial bonanza for HMRC they will also be hoping to gather the intelligence needed to ensure that future property sales by these investors do not slip off their radar.”
HMRC says that it will assess the results of its initial wave of letters before broadening the campaign.
Wilkins Kennedy points out that in any such enquiry HMRC is likely to look into the source of funds used to acquire the buy-to-let properties to ensure that tax is not due on such amounts.
ENDS
Press enquiries:
Peter Goodman
Partner
Wilkins Kennedy
Tel: 020 7403 1877
Nick Mattison or Paul Arvanitopoulos
Mattison Public Relations
Tel: 020 7645 3636
