Trying to pull the wool over the taxman’s eyes is never a good idea. You might think you can get away with not declaring income from property investments, but eventually the long arm of HMRC is going to catch up with you. Thankfully, for all those landlords who have failed to declare taxable income, HM Revenue & Customs is giving them one final chance to put right their tax affairs in the form of a tax amnesty.
Profits gained from letting out or disposing of rental property are taxable, which means it should be declared by way of Self Assessment at the end of the financial year. Of course not everyone thinks that they should pay tax on what they earn, so instead they don’t bother submitting a Self Assessment return. However, just in case this applies to you, be warned that HMRC has specialist task forces in operation whose sole job is to uncover dodgy property dealings. Those landlords who are subsequently found to have failed to declare taxable earnings will face financial penalties, and in the worst cases, may even be sent to prison for a spell.
The tax amnesty is designed to encourage offenders to come forward and admit they are in the wrong. Genuine mistakes will be treated leniently and may even escape punishment, particularly if a landlord has been given the wrong advice by an HMRC advisor. But if you have been avoiding paying your taxes, it is a good idea to come clean now before a tax inspector comes knocking on your door!
