Dealing With Undeclared Rental Income?

When dealing with undeclared rental income, it’s first important to understand the following points

• It is now more important than ever to ensure your tax affairs are up to date. Government systems are much improved and offer greater visibility on individuals who are not up to date.
• If you have only recently acquired a rental property, it may be possible to get things up to date by completing relevant tax returns.
• The Let Property Campaign is helping individuals with many years of undeclared income.
• A property tax specialist will help you to get things up to date whilst also minimising the tax, interest and penalties due. They will also reduce the potential stress or worry, acting as a barrier between the individual and HMRC.

Whether you own one or multiple properties, then you need to ensure that all their tax situations are dealt with accordingly and up-to-date. HMRC have become stricter on landlords and government systems have been improved recently to cross reference Land Registry records with tax returns to identify those who aren’t up to date. Most mortgage lenders are also requiring the submission of tax returns to them prior to making a mortgage or re-mortgage offer.

If you’re submitting a tax return, then the deadline is the 31st January the following year of that tax year. This means that it is often possible to deal with tax issues up to 18 months or more after an individual begins receiving rental income. HMRC will also often accept tax returns going back at least one further year, but this is by agreement in each case.

The Let Property Campaign is a project launched by HMRC to encourage individuals to rectify their tax affairs. It has been ongoing for a number of years and offers an easier way to rectify your tax affairs, particularly where there may be a number of years to deal with. Individuals that come forward under the scheme are promised a ‘lower penalty’ than if HMRC raise an enquiry. There is no deadline for the campaign but acting sooner prevents any risk that HMRC will raise an enquiry first and put the case on a track that will likely result in higher penalties.

Since the campaign was launched a few years back, there have been many landlords coming forward to rectify their tax affairs. Understanding the best approach and the way to minimise penalties and other potential payments comes from experience and understanding the attitude and approach of HMRC. It is therefore best to work with a property tax expert that has experience dealing with undeclared rental income and property tax investigations. 

Source: https://wisteria.co.uk/