HMRC chases tax on undeclared rental income
For those with undeclared income from residential properties, the net is closing in. Whether you live in the UK or Overseas, acting now is the best course of action.
HMRC are encouraging those individuals to use their Let Property Campaign to come clean and bring their tax affairs up to date. Unlike previous campaigns, there is no “window” to make the disclosure and it is HMRC’s intention to keep the campaign live for some time, suggesting that HMRC feel it is worth committing to for the foreseeable future.
One of the main benefits of the scheme is that HMRC are much more likely to levy lower penalties for coming forward, before being prompted. It is also highly possible that HMRC will allow any individuals that cannot afford to pay the unpaid tax and levied penalties using a payment plan, instead of expecting the tax to be paid as one lump sum.
For those individuals that do not want to disclose undeclared income, HMRC are exploring many avenues of data collation to track them down. Once identified, HMRC will write to the individuals identified for clarification. If necessary, HMRC can request a compliance check or commence an enquiry in to the tax affairs of anyone identified. For those identified and contacted directly by HMRC, the benefits of the let property campaign are no longer open. This makes coming forward as soon as possible far more worthwhile, from both a time and financial standpoint.
The penalties levied by HMRC, outside of the Let Property Campaign, could be up to 100% of the outstanding tax or up to 200% for offshore related income (e.g. an overseas holiday home let out). It is even possible that criminal prosecution could apply in the most extreme cases.
In addition, the cost of an enquiry for the taxpayer can be significant in situations like this and for those dealing with them on their own (i.e. with no professional help) it can be all consuming.
With the powers that HMRC now have regarding data collation and the assistance of the IT age it makes coming forward under the Let Property Campaign a no brainer. Simply turning a blind eye or thinking they will not find me will cost you in the long run.
Please feel free to get in touch with one of our team should you require any further information.