Have you ever come across situations where you have not expressed to anybody that you have made income on your buy to let? Is it something you should not be disclosing with the HMRC? A big NO.
Though you are making a physical loss to do with your property business by paying taxes, you still have a responsibility to tell HMRC about it. The Let Property Campaign (LPC) is an ‘opportunity’ that is designed by HMRC, and you should not be thinking of not taking it.
If you are a landlord, then this opportunity is for you to disclose your rental property earnings to HMRC to make sure you are up to date with your tax affairs.
Are you eligible for LPC?
You can inform HMRC to become part of LPC if you are an individual landlord who:
- Lives in the UK and renting property abroad.
- Lives abroad and renting out a property in the UK.
- Renting out a single/multiple properties.
- Rents out your holiday home even if you use it yourself.
- Rents out homes to students or workforce.
How far can we go back to do disclosure for HMRC Let Property Campaign?
There will be many factors to decide on your assessable tax years. HMRC’s powers to raise assessments are restricted by the time limits set out in legislation. According to the legislation, HMRC is permitted to go back up to 20 years, and in extreme circumstances, HMRC may open a criminal inquiry.
Consider a voluntary disclosure.
You should not be tricked into believing that you got to pay nothing to HMRC if you have not received any formal notifications yet. You can make a voluntary disclosure under the Let Property Campaign and, thereafter reduce the penalties you may have to pay to HMRC. You’ll pay a much smaller fine by coming forward and make an unprompted disclosure to do so than if HMRC had to write to you first.
What if you don’t make a disclosure?
It is no good to pretend that you did not make rental income because HMRC will have many methodologies and ways to uncover the truth. If you choose not to disclose your rental income, or make a voluntary disclosure, then HMRC can launch an investigation into your tax affairs. This could result in you paying a lumpsum of your money as penalty to HMRC.
What do you need to know about the Let Property campaign penalties?
Depending on how well disclosures were made by you as part of the Let Property Campaign, the penalty may be lowered. The Let Property Campaign penalty reduction is applied on the difference between the ranges it falls within.
If HMRC opens an enquiry, they can go back up to 20 years and will charge a higher penalty:
- It could be 100% of the tax owed.
- It could be as high as 200%, in the case of offshore related income.
Being experts in property taxes, we have successfully handled many such situations for our clients. We will try lower the fine to a fraction of what you would have otherwise had to pay.