The majority of landlords are law abiding citizens who are fully aware of their tax liabilities, but if you made a mistake on any of your recent annual your tax returns, or worse, didn’t bother to submit one at all, you could find yourself facing the wrath of HMRC very soon!
An HMRC taskforce is about to be launched and it seems likely that it will focus primarily on landlords in certain parts of the UK, although the investigations could be further extended to all parts of the UK eventually. Landlords with HMOs and temporary let accommodation are most likely to be targeted, but this does not mean you are safe if you only have one or two private rental properties!
What is HMRC looking for?
HMRC inspectors are hoping to find evidence of underpaid taxes, either due to ignorance, or through deliberately providing misinformation on tax returns. Information is likely to be gathered from a wide variety of sources, including other government departments; HMRC is also likely to trawl through property advertisements placed in universities and on the Internet in their efforts to leave no stone unturned.
What about VAT?
If you operate temporary accommodation, perhaps for seasonal workers, you need to be aware that VAT is chargeable in the same way as it would be on a B&B or hotel accommodation.
What should I do if I think I owe HMRC money?
Your best course of action is to speak to your accountant as soon as possible in order to sort your tax affairs out, and if you don’t have one, find one immediately. HMRC might already have identified you, so by ignoring the fact you owe tax, you will likely face far higher penalties.
