Landlords have become the latest targets on the HMRC tax evasion hit list says a Nottingham taxation expert.
HMRC launched a campaign in October 2013 aimed at getting landlords to come clean about tax evasion and has since been employing increasingly tough measures to reclaim an estimated £500m of unpaid tax each year.
Simon Browning, tax partner at UHY Hacker Young, said: “I announced in August last year that buy-to-let investors were going to be put under real scrutiny by HMRC, as part of its increasingly aggressive approach to dealing with tax evasion.
“HMRC is now writing to lettings agents demanding information for those rents received on behalf of property landlords – whether they are individuals or companies holding investment properties.
“The East Midlands is a really attractive prospect for buy-to-let investors – both from inside and outside the UK – due to a higher yielding property market, giving greater returns on investment, so there are potentially a huge number of properties in the region affected by this latest move.
“This provides further evidence that HMRC has really upped the ante in terms of reclaiming unpaid tax, whether by means of aggressive avoidance scheme or by under declared income.
“We’ve also seen that HMRC has become increasingly aggressive in relation to issuing penalties to taxpayers in these circumstances, which could be severe.”
Fewer than 500,000 UK taxpayers are registered as owning a second property, though estimated figures suggest that the true figure is much higher at around 1.5 million.
The disclosure window for landlords has now closed, but Simon warns that any potential penalties could be mitigated by coming clean regardless.
“While the simple way to avoid any aggressive action from HMRC is to ensure that you have your affairs in order and that you are paying the relevant tax, it is not too late to come clean should you have made a mistake,” added Simon.