Are you a private landlord letting out a residential property? If so, you may want to take advantage of a scheme operated by HMRC.
The HMRC Let Property Campaign was launched at the end of 2013 with the aim of allowing landlords to bring their tax affairs up to date.
Think of it as a way of rewarding you for coming forward and admitting that you have tax to pay. The idea is that if you make a voluntary declaration of undisclosed income and underpaid tax, you’ll be treated more leniently than if HMRC discover your circumstances subsequently.
Although it was launched with some fanfare, many people assume that perhaps it has died a death. The reality, however, is that the programme is still operational and you can still take advantage of it. Some 10,000 landlords did just that in the two years after its launch, netting some £50m in recovered tax for the Revenue.
You could potentially owe tax on a residential property you let, regardless of whether it is in the UK or abroad, even if you’re just renting out a room in your main property. So my advice is to talk to your accountant and take advantage of the scheme.
There’s a two-stage process. First of all you fill out a form and notify HMRC that you believe you have tax to pay. They then send you some correspondence and a disclosure form, which you need to complete within three months. You, or your agent, quantify the tax due and calculate interest using a straightforward formula.
It’s even possible for you to suggest what penalty you should receive. Perhaps there are mitigating circumstances, for instance?
Remember, HMRC has access to a great deal more data now and is being passed the names and addresses of landlords by letting agents. So the message is to let them know about your property income before they come knocking on your door.