Does HMRC know about your rental income?
HMCR is actively hunting out landlords who don’t pay tax and cross referencing the various databases available to them. These include Land Registry, mortgage information and tenancy deposit scheme databases; they can link you to any properties you own. If you are identified by HMRC and do not appear to be paying tax on rent expect to receive a letter from them. We have seen a huge increase in the amount of these letters being received in the last few months.
When this happens you will have to pay tax on rental income for the past 20 years and pay a penalty of up to 100% of that tax. You could also be the subject of a criminal investigation. However, it does not have to be like that.
The Let Property Campaign
There is a way you can disclose your rental income to HMRC now and get a considerably smaller penalty. This is via HMRC’s Let Property Campaign (LPC). If you voluntarily contact HMRC under this scheme
- You will pay a lower penalty — or in some cases, you may not have to pay any penalty at all
- HMRC may not go back the whole 20 years
- You will be given time to pay
- You won’t be prosecuted (except in exceptional cases)
- The LPC won’t be an option forever so take advantage of HMRC’s leniency while you still can!