Out in Force

4th December 2013

Over the last couple of years, HMRC has launched over 30 Task Forces to identify tax evasion in specific market sectors.

These Task Forces have on the whole been successful by encouraging tax evaders to come forward by offering lower penalties, but interestingly, no such incentives are being offered by the new Task Forces targeting landlords.

Perhaps the lack of an incentive is because HMRC already has good information on defaulters in the first place, for instance letting agents have been required for a long time to provide details to HMRC  regarding landlords.

Since 2011 HMRC has had even more far reaching powers and can ask almost anyone, including a tenant, to provide information about a landlord who may be evading tax, and refusal to co-operate can lead to a £300 fine.

The Property Rental Task Force is concentrating its efforts in East Anglia, London, Leeds, York, Leicester, Nottingham and Lincoln, but of even greater interest and much closer to home, they have included Durham and Sunderland.

HMRC has already announced that the net will be widened throughout the course of 2013 and from September it will start reviewing residential property sales with a view to collecting tax on undeclared gains.

The ‘Property Sales Campaign’ will give anyone who has sold a property which is potentially liable to Capital Gains Tax, the chance to come forward, and by doing so they will face lower penalties than would otherwise apply.

On the basis that NI numbers have been shown for some time on Stamp Duty Land Tax forms, it should be relatively easy for HMRC to tie up property transactions to the income tax records of  individuals.

So the message is clear, if you are renting out property, irrespective of whether it makes a profit or loss, or indeed if you are selling a rental property you need to declare the income to HMRC.

For further help and advice, please contact our Tax Department.

Chartered Accountants in Sunderland, offering expertise on everything from Tax and Business Planning,
to Accounts and VAT.