HMRC Issue One To Many (OTM) Letter Campaign

In relation to income from short-term property letting, HMRC has recently launched a One to Many (OTM) letter campaign.

In the letter, it is stated that HMRC’s records indicate that the individual may have earned an income from short-term rental properties and not told HMRC about this income. Consequently, it is possible for them to owe tax on the income they have received. As a result, they are asked to complete a ‘Certificate of Tax Position’ within 30 days of receiving the letter and to tick the box that best describes their current tax situation.

There is a suggestion from HMRC that if taxpayers have previously undeclared income to disclose to HMRC, they should use the Digital Disclosure Service (DDS) process provided by HMRC to disclose the income in question. There may, however, be other approaches that may be more appropriate depending on the individual circumstances of the taxpayer, such as Code of Practice 9 in cases where fraud is suspected.

A copy of the letters has also been sent to the taxpayer’s authorised agent if the taxpayer has one.

Here is a rough draft of HMRC’s letter that has been provided for your reference (it has been adapted to not read as an exact word-for-word example):

As per our records, it appears you may have earned income from short-term property lettings and have not told us about it. You may owe us a tax as a result of this.

What you need to do now

We would appreciate it if you would fill in the enclosed ‘certificate of tax position’ and return it to us by [insert date 30 days ahead]. The purpose of this is so that we can help you take care of your tax affairs in a timely manner.

If you have income you need to tell us about

Please make sure you tick the box next to statement 1 when filling in the enclosed certificate. By the above date, you are required to send the certificate to the address shown at the top of this letter.

In addition to this, we need you to use our online Digital Disclosure Service to let us know that you need to disclose this income. To access HMRC’s disclosure service, go to GOV.UK and search for ‘HMRC: disclosure service’. In order to access the Government Gateway, you will need a user ID and password. You will need to create a user ID if you do not already have one. To do this, go to GOV.UK and search for ‘register for online services’, then choose ‘register for HMRC’ under ‘register for online services’.

You will receive an acknowledgement letter from us once we receive your ‘certificate of tax position’. There will be a 90-day grace period from the date you receive this acknowledgement letter in order for you to work out and pay any tax you owe. In order to do this, you can use our Digital Disclosure Service. If you would like to find out more about making a voluntary disclosure, go to GOV.UK and search for ‘make a voluntary disclosure’.

If you don’t have any income you need to tell us about

Please check the box next to either statement 2 or statement 3 when you fill out the enclosed certificate. It is essential that you send the certificate to the address shown at the top of this letter by the date specified above.

If you don’t reply to this letter

Your tax affairs may be the subject of an investigation by us. It is possible that you will have to pay late payment interest and penalties if you don’t tell us about your income. You can find out more about this by going to GOV.UK and searching for ‘Penalties for late payment and interest harmonisation’.

You may be able to get tax-free allowances

You may be able to pay less or no tax on your property income as a result of tax-free allowances. You can check whether you are eligible for these allowances by going to GOV.UK and searching for ‘Tax-free allowances on property and trading income’.

More information

As we understand that tax can be a complicated issue, we want to make sure that you get everything right so that we can help you. Please do not hesitate to contact us using the details at the top of this letter if you need any assistance. If we have a current enquiry open into any of your tax returns, please contact the officer who is handling the enquiry and let them know that you have received this letter.

In the event that you have a professional adviser, we have also written to them. It may be useful to show this letter to your tax advisor if you have one. It might be a good idea to seek the advice of a professional if you do not currently have an adviser.

If you need extra support

Please let us know if you have any health issues or personal circumstances that may make it difficult for you to communicate with us. If there is anything we can do to help you, we will do so. You can obtain more information by going to GOV.UK and searching for ‘get help from HMRC if you need extra support’.

Important information about communicating by email

If you choose to email us, please be aware that email is not a secure form of communication. As a result, there is a risk that information that is sent by email could be changed or read by someone else before it reaches us. You should only use email to contact us or to send us information if you are comfortable with the risks involved in using email. Do not click on any links in an email or provide any personal details in response to it if you have any doubt that an email has come from HMRC. In the event that you think an email you have received is not from us, please forward it to our phishing team at phishing@hmrc.gov.uk.

Yours faithfully

Campaigns and Projects

The following additional information about the campaign has also been provided by HMRC.

• To help their customers to understand how much tax they should be paying, HMRC is working with online providers for short-term lettings, such as Airbnb, to help them to understand how much tax they need to pay and how to ensure they get it right the first time.
• The letter will be sent to a small number of people who might have earned income from short-term property rentals between February and March of 2023.
• There has been an increase in the number of letters that have been issued by HMRC since the week commencing 6 February 2023.

We hope you found this recent update informative, if you found this article useful then you may also enjoy reading about this new tax time bomb or all about sharia mortgages next.

Thandi Nicholls Ltd
Creative Industries Centre
Glaisher Drive
Wolverhampton
West Midlands
WV10 9TG