HMRC - New Campaign On Landlords
A new intiative on taxpayers letting out property commenced in 2008. HMRC are looking to identify those who declare incorrect rental income on their Tax Returns, and therefore do not pay the correct amount of tax. HMRC have sources to tap into in order to verify gross rents which have been received by individual landlords. These include "Special Returns" issued each year to Lettings Agencies. With the huge number of property investors now in the UK it may in time prove to be a lucrative initiative for HMRC.
Our team of tax enquiry experts have handled such cases before, but this is a new initiative and the property investors at which this scheme is targeted need to be aware, and most importantly need to take care that correct rents (including cash top ups) and correct (rather than inflated) direct costs only are claimed against the rental income.
Take care to retain all paperwork related to outgoings, including all small items of expense. For those who maintain portfolios of property, expense such as fuel costs for management and maintenance, legal costs (leases, gas certificates etc) are claimed. All costs for essential maintenance outlay must also be supported by receipts.
It is unwise to seek any tax relief for what are essentially improvements to a property rather than an essential repair. HMRC take a dim view of taxpayers who attempt to do so. Regions vary, but in this particular market most landlords probably adopt the view that outlay against their lettings must be contained. It is part of the usual commercial approach to this market.
Antony Signorini - Tax Consultant (Cambridge)
Tax Enquiry Company
Offshore Enquiries Starting
The second phase of the offshore enquiry initiative has started. Letters have been sent out to around 5000 individuals for whom information is held by HMRC, but who did not make a disclosure under last year's Amnesty Arrangements. If you receive one of these letters call us and we shall ask one of our team to contact you for an initial consultation. This will apply wherever in the UK you may be located.
Clive Griffiths - Tax Consultant (Wirral)