HMRC Tax Crackdown On Expat Landlords

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Expats landlords letting homes in the UK are starting to receive threatening letters from HM Revenue & Customs (HMRC) abut unpaid tax.

As HMRC comes under increasing pressure from the government to collect more tax, property investors are increasingly targeted because the nature of their investment is easy to track.

HMRC reckons landlords are avoiding paying at least £500 million a year in income tax and more in unpaid capital gains tax on the sale or gifting of homes.

Now, the tax authority is writing to current and former landlords to nudge them into action if they have not paid the right amount of tax on their rents or profits from the sale of investment property.

The letter says: “HMRC has data relating to landlords and is comparing this with what individuals have or have not told us. This letter is the first stage following that process as HMRC is aware you are a landlord who is letting property and that you may be liable to tax on that income.”

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Financial profile

The letter goes on to say that HMRC is running a Let Property Campaign that offers landlords who may owe tax discounts on penalties for failing to declare the income.

HMRC has developed a detailed financial profile of landlords with software called Connect.

This software collates information from the Land Registry, the electoral roll, local council housing allowance records and letting agents to identify buy to let and shared homes in multiple occupation (HMOs).

If the Let Property Campaign follows other similar tax crackdowns against cash businesses, doctors and the self-employed, HMRC will start hundreds of tax investigations and impose hefty penalties as soon as the campaign ends.

Criminal investigations

No end date has been announced, but it is expected to be around spring 2015.

The Let Property Campaign applies to all property investors with residential letting in the UK, regardless of where they live.

This takes in investors who are part of the Non-Resident Landlord Scheme (NRLS) as well as property owners living overseas who have failed to notify HMRC that they are receiving rents.

The campaign applies to investors who may have sold or gifted property in recent years as well as those currently renting out homes.

“Property owners who fail to get in touch may risk a criminal investigation and some serious penalties,” said an HMRC spokesman.

More information about the Let Property Campaign

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