We have recently taken on a number of new clients who have undeclared rental income. Often these individuals have received prompted letters from HM Revenue & Customs’ Let Property Campaign department. HMRC have access to all land registry documents and a sophisticated computer system that can identify taxpayers who own multiple properties. In other instances we are approached by people who have had sleepless nights and want to confess to HMRC about their undeclared rental profits.
The Let Property Campaign has been around for a number of years. It is an opportunity for landlords who owe tax through letting out residential property, in the UK or abroad, to get up to date with their tax affairs in a structured manner, with fixed levels of penalty. It doesn’t apply to commercial property letting or lettings by a trust or company. The campaign can be used whether or not HMRC have contacted you first, although penalty levels will be lower if you come forward before they find you.
If you’re a landlord with undisclosed income and wish to use the Let Property Campaign you will firstly have to inform HMRC accordingly. You’ll then have 90 days to calculate and pay the tax, interest and penalties that you owe.
Penalties range dependent on why the information was not declared to HMRC and whether the declaration was prompted or unprompted. Types of behaviour will fall under non-deliberate, deliberate or deliberate and concealed. If you receive a prompted letter from the Revenue then the penalties will range from 10% up to 100% of the tax due for UK property, and up to 200% for offshore rental income. If you voluntarily disclosure to HMRC then the penalties will range from 0% up to 100%. We always recommend that you come forward before HMRC find you as this will give you the most favourable outcome.
If you use our taxation services we will negotiate the lowest possible penalty level for your given circumstances. We are usually successful in agreeing penalties of no more than 20%, often lower and sometimes even nil!
If you or anyone you know have undeclared rental income and would like to speak to one of our tax advisors then please contact Jan or Darren in our tax department.