HM Customs & Revenue officers have launched a new regime designed to ensure landlords of all sizes are keeping the necessary records related to their buy to let property business.
A pilot scheme for record compliance was run between April 2011 and February of this year and more than three thousand buy to let businesses were inspected by HMRC. Unfortunately, 36% of those landlords targeted were found to have issues with their record keeping and a further 10% were identified as having ‘serious’ problems that necessitated follow up visits.
Following the success of the pilot scheme, it is now being rolled out nationwide. Landlords in London and East Anglia will be the first to face the wrath of HMRC, but over the course of the next few months, landlords across the UK can look forward to a friendly chat with HMRC.
What can landlords expect?
In the first instance, landlords can expect a preliminary phone call to establish what kind of business records (if any) they are keeping. If HMRC suspect inadequate records are being kept, an appointment 90 days later will be scheduled for a tax inspector to come and inspect records. Hopefully this should give errant landlords time to sort out their admin, but if further problems are found (ie. 90 days is just not long enough to create 5+ years of adequate records), you can expect fines and further visits.
It might sound a bit harsh, but this approach is designed to help landlords before everything snowballs into massive errors on tax returns. So although you might view record keeping as a drain on your time, remember: keeping accurate records is essential!
