HMRC is determined to claw as much tax from landlords as possible. In recent months, HMRC inspectors have been scrutinising landlord activities, in particular the money generated by sales of buy to let investment properties. Two dedicated HMRC task forces have already been created in Yorkshire and the South East to make sure property investors are not evading their tax obligations.
Widening the Net
In a further development, HMRC has been publicising a ‘property sales campaign’ to try and round up people who have not yet declared income from the sale of rental and investment properties, so if you have recently sold a property that is not your main residence, you better hurry up and declare it to HMRC before 6th September.
An Increase in Landlord Tax Investigations
Industry experts believe that the current tax investigations are only the tip of the iceberg. They believe that HMRC is likely to ramp up its investigations after the September deadline has been and gone.
Joining the Dots
HMRC is like a dog with a bone once they have the scent of something awry, they rarely let it go. Tax investigators use paper trails to track down landlords who have failed to declare income. By correlating information from Land Registry records and tax information held by letting agents, it is pretty easy to identify any interesting discrepancies.
As the buy to let market continues to flourish and grow, it is likely that landlords will be increasingly thrown under the spotlight by HMRC tax inspectors. To avoid any penalties, it is wise to be transparent in your tax affairs and never try and outfox HMRC, or you may end up paying the price.
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