The impending Renters Reform Bill is set to be the most significant change in housing legislation over the past four decades.
It primarily aims to improve the conditions for the 11 million renters in the UK, but it would also mean that landlords must ensure their tax records are up-to-date.
This is because HM Revenue & Customs (HMRC) could gain authority to scrutinise tax compliance in the housing sector.
The Bill proposes the establishment of a comprehensive database documenting landlords and their residential properties. Designed primarily to enable renters to verify their landlords’ credentials, this public data could also be used by HMRC for tax compliance checks.
Due to this, landlords are strongly advised to ensure their tax obligations and reporting are promptly and accurately met.
The Let Property Campaign is an initiative designed to facilitate this, particularly for landlords who may have unpaid taxes from leasing residential properties, both domestically and internationally.
To participate in the Let Property, you must:
· Notify HMRC that you want to take part in the campaign
· Disclose to HMRC all income, gains, tax, and duties you have not previously told them about
· Make a formal offer
· Pay what you owe
· Help HMRC as much as you can if they ask you for more information
The Let Property Campaign allows landlords to suggest the penalties they believe should be imposed for late payments. The size of the penalty is based on the reasons for failing to declare income, with intentional non-disclosure attracting higher penalties than simple mistakes.
By proactively disclosing tax information through this process, landlords may mitigate potential penalties if they are discovered to have underpaid taxes.
HMRC has the authority to investigate up to 20 years of records and may initiate a criminal investigation in serious cases.
With the potential implementation of a new public database, landlords keep on top of their taxes. The Let Property Campaign can be useful to assist with this to minimise the potential for penalties and further charges.
If you are a landlord in need of advice regarding tax matters, contact us.