The Let Property Campaign – What is it and how we can help you
The Let Property Campaign has been around for many years now and has been organised by HMRC in order to provide a long-standing disclosure opportunity for residential property landlords who need to update their tax affairs in order to avoid penalties and interest.
The Let Property campaign offers individuals the opportunity to disclose any undeclared income they may have received in previous tax years. In exchange, HMRC will limit the penalties that could be imposed than if they were to “discover” you.
In the event that you have not declared your rental income, it would be wise for you to come forward and do so as soon as possible. In the absence of such measures, the penalties levied could be both crippling and severe. We understand that getting a letter from HMRC can come as a bit of a surprise and a shock. In many cases, the failure to declare rental income has been the result of genuine oversight and no malice was intended.
There is a significant number of our clients who are what is referred to in the trade as ‘accidental landlords’. These are people who have acquired a second property as a result of moving into a new house with their partner, inheriting a house upon the death of a family member, or moving abroad to work for a year or two and then moving back home afterwards.
In the last few years, we have encountered a significant minority of people who have come to us several years later than they should have, and have been renting out a house or flat without filing a self-assessment tax return for several years or more. Most often, this is due to the fact that they haven’t even considered it, since they are accustomed to their employer’s PAYE scheme automatically processing their tax bill.
There are times when this is because the person has been naive, renting to a friend on ‘mate’s rates’ and believing that a small amount of extra pocket money doesn’t have to be declared under their tax bracket. Also, it could be the case that they actually did expect to pay tax but made a mistake in assuming that the letting agent was handling it on their behalf.
No matter what the reason was, before 2013, the only options available to people who learned they had failed to pay taxes, or underpaid taxes, were (a) to hope that HMRC never finds out and live with the guilt and risk, or (b) to admit it to HMRC and hope for the best.
How would HMRC know about my undeclared rental income?
There is a record created by the Land Registry when you buy a property. As well as this, there is also a footprint made with letting agents, local authorities (for payments around council tax), mortgage applications, and utility companies. As well as any anonymous tip-offs that could have been made.
There is a sophisticated system within HMRC, called Connect. The Connect system is able to identify taxpayers who are not paying the correct amount of tax by using data analysis and flag them up. It is through the use of this powerful tool that HMRC is able to frequently write to taxpayers and encourage them to take advantage of the Let Property Campaign. This enables taxpayers to put their affairs in order.
HM Revenue & Customs (HMRC) is not secretive about how they source their data, and you can read more about how some of the information they gather is obtained here.
Why should you use the Let Property Campaign?
HMRC is under constant pressure to collect more tax. In fact, it has been widely reported that for every £1 spent by HMRC to pursue undeclared income, they receive £5 in return.
In light of this, it is no wonder that HMRC has been given wider powers. In conjunction with substantially more funding, there is a heightened emphasis on pursuing taxpayers with undeclared income so that they can be held accountable.
The HMRC focuses on compliance activities where they can earn the highest return, and, as we know, landlords are an easy target for them to pursue. When they have the information they need, they will reach out to landlords who they consider may not have disclosed all of their rental income to HMRC.
It will then be necessary for HMRC to conduct compliance checks or inquiries in order to resolve their case. If this occurs, you will not have the opportunity to make use of The Let Property Campaign anymore.
Thus, if you want to use the Let Property Campaign, you need to make a request before HMRC contacts you. In order to avoid penalties and resolve matters before they get out of hand, it is strongly recommended that voluntary disclosures are made. There is also a chance that it might help to persuade HMRC that this was simply a mistake or a careless error rather than something that should be taken more seriously. This can also help to reduce the number of years that have to be included in the voluntary disclosure as well.
In our capacity as property tax specialists, we have handled numerous cases for clients successfully since 2010. From notification to payment of any tax due, we can guide you through the entire process. We are often able to reduce the penalty to a minimal amount compared to what you might have otherwise had to pay.
In order to determine our fees, we take into account the number of years that need to be declared as well as what records you have retained.
If you are concerned about approaching HMRC and would like to speak to someone about it, please do not hesitate to contact us. Our team will be with you every step of the way, and we will provide you with expert advice and guidance.
© Thandi Nicholls Ltd 2022 All Rights Reserved – The above articles are provided for guidance only and may not cover your personal circumstances so you should not rely on them. It is important that you seek appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a uklandlordtax.co.uk, K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.
Do you have a question for our experts?
If there’s a property tax issue that has you puzzled or worried, get in touch. Everyone on our team loves to talk, especially when it helps people like you find peace of mind.