Wednesday 27th February 2008
Her Majestys Revenue and Customs has begun a crackdown on landlords who have failed to declare investments in buy-to-let properties on their self-assessment tax forms, it has been revealed.
According to accountancy company Wilkins Kennedy, the move comes after years of compiling data on property owners who are believed to be in breach of tax regulations.
HMRC is now sending out letters to thousands of UK landlords to force compliance in the declaration of their property investment activity. Those receiving such letters will need to provide in-depth statements of costs for repairs, professional fees and other expenditures associated with property rental.
Peter Goodman, a senior tax partner at Wilkins Kennedy, said: "There has often been speculation that HMRC would start a compliance drive against landlords, but up until now inquiries have been pretty piecemeal. This is a real change in tactics for HMRC."
He added that the letters need to be taken seriously, with strict financial penalties possible for those who are found to have been paying less tax than they should have.
Mr Goodman advised landlords to consider an early declaration if they believe they have fallen short of their tax contribution responsibility.
The sharp rise in property prices in recent years has meant that even highly-leveraged buy-to-let property investors may still be making profit that they need to pay tax on, he continued.
Despite a recent slowdown in the property market, a spokesperson from mortgage broker Savills Private has told the Independent that the demand for rental properties would continue to prop up the market as calls for such housing remained high.
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