The Let Property Campaign 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 simple way and take advantage of the best possible terms.
If you’re a landlord and you have undisclosed income, you must tell HMRC about any unpaid tax now. You’ll then have 90 days to work out and pay what you owe. This guide explains how you can do that.
The scope of the Let Property Campaign
The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes. This includes:
- those that have multiple properties
- landlords with single rentals
- specialist landlords with student or workforce rentals
- holiday lettings
- renting out a room in your main home for more than the Rent a Room Scheme threshold
- those who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK, as you may still be liable to UK taxes
This campaign is not open to those landlords who are letting out non-residential properties such as a:
- lock up
You also cannot use the Let Property Campaign if you want to disclose income on behalf of a company or a trust.
Landlords who jointly own property with their husband, wife or civil partner should read guidance in the Property Income Manual PIM1030 under the heading ‘Jointly owned property: husband & wife or civil partners’. They should also read about the 50/50 rule outlined in the Trusts, Settlements and Estates Manual TSEM9800.
You can use the Let Property questionnaire to check if you need to disclose unpaid taxes under this campaign.
Disclosures outside of the Let Property Campaign
You can still make a disclosure and put your tax affairs in order outside of the Let Property Campaign. Your disclosure will not be part of the Let Property Campaign and the terms offered here will not be available.
To find out whether you fall within any other campaign you need to check HMRC campaigns.
If you make a full and voluntary disclosure of all unpaid liabilities in these circumstances, you can usually expect a lower penalty than HMRC would normally charge if they raised an enquiry or compliance check without the disclosure.
If you want to make a disclosure of Inheritance Tax, trust or administration period liabilities, write to HMRC at:
Trusts and Estates Risk Team
HM Revenue and Customs
PO Box 38
Castle Meadow Road
How to take part in the Let Property Campaign
To take part in the Let Property Campaign you should:
- tell HMRC that you want to take part in the Let Property Campaign (Notify)
- tell HMRC about all income, gains, tax and duties you’ve not previously told them about (Disclose)
- make a formal offer
- pay what you owe
- help HMRC as much as you can if they ask you for more information
To benefit from the reduced penalties offered, HMRC will take account of the level to which you’ve helped them and the accuracy of the information you provided.
What’s in it for you
Unlike previous campaigns, there is no disclosure ‘window’ requiring you to disclose what you owe by a specific date.
This campaign will be ongoing for some time, landlords intending to come forward who delay, risk higher penalties if they are subject to an enquiry and they have not already notified an intention to disclose.
If the errors were due to misunderstanding the rules or deliberately avoiding paying the right amount it is better to come to HMRC and admit any inaccuracies rather than wait until HMRC uncovers those errors.
The Let Property Campaign offers the best possible terms available to get your tax affairs in order. You can take advantage of these by notifying your intention to participate and co-operating with HMRC to make a full disclosure and payment.
When you make your disclosure you can tell HMRC how much penalty you believe you should pay. What you pay will depend on why you’ve failed to disclose your income. If you’ve deliberately kept information from HMRC you’ll pay a higher penalty than if you have simply made a mistake.
You may not have to pay any penalty at all but if you do it is likely to be lower than it would be if HMRC finds out you’ve not paid enough tax.
If you cannot afford to pay what you owe in one lump sum, depending on your circumstances, you’ll be able to spread your payments.
If you registered for self-assessment and completed tax returns within the appropriate time limits, but have simply made a careless mistake when declaring your income, you only pay for a maximum of 6 years – no matter how many years you’re behind with your tax affairs.
However, if you do not come forward and HMRC finds later that you’re behind with your tax, it may be harder to convince them that it was simply a mistake. The law allows HMRC to go back up to 20 years and in serious cases HMRC may carry out a criminal investigation.
Make sure you’re certain about what you owe and get things right for the future.
If you choose not to tell HMRC about undisclosed liabilities
HMRC is targeting compliance activity across all landlord types and will identify and write to landlords who they consider may not have declared all their rental income.
This will involve HMRC carrying out compliance checks or enquiries to resolve matters. The customers involved will not then be able to make use of the opportunity offered as part of this campaign.
HMRC will identify those who they believe should have made a disclosure by:
- comparing the information already in their possession with customers’ UK tax histories
- continuing to use their powers to get more detailed information about payments made to and from landlords
Where additional taxes are due HMRC will usually charge higher penalties than those available under the Let Property Campaign. The penalties could be up to 100% of the unpaid liabilities, or up to 200% for offshore related income.
If you’re disclosing offshore liability only, you can contact the Offshore Disclosure Facility Helpline for more information.
In extreme cases HMRC may consider the instigation of a criminal investigation, in line with their criminal investigation policy.
Here at Pursglove & Brown, we have experts in property tax, in the UK and abroad, so if you have any queries at all, please contact us for a free informal consultation and we will be happy to help.
Call 01244 400315 or email [email protected].