Revenue targets non tax paying investors
HM Revenue & Customs (HMRC) are to target buy-to-let investors who have not paid tax on money made from letting or selling a property in a major crackdown.
HMRC are calling this its Property Campaign and recently sent letters to landlords recently as part of their first stage. The letters demand details on any property investment activity going back six years and request a detailed breakdown of costs such as repairs and professional fees. If landlords fail to reply, HMRC have said in extreme cases they would begin criminal investigations.
Landlords who reply promptly and fully disclose their incomes are less likely to face fines, a spokesman added. Offenders will be forced to repay taxes dating back six years and could face additional fines and penalties equal to 100 per cent of the total tax owed.
It is believed that HMRC officials have cross-referenced data from hundreds of letting agencies against stamp duty returns to compile a database of landlords who may not have paid any or enough tax.
Two groups of landlords have been identified as existing taxpayers with information showing they have let a property but have not disclosed any income and individuals with no tax record but where the taxman is aware they have let a property.
There are approximately 1 million buy-to-let landlords in the UK, with the numbers increasing in recent years. It is estimated that 340,000 loans and remortgages were granted to buy-to-let landlords in 2007, more than the total amount of loans to first-time buyers.
Levels and bases of, and reliefs from, taxation are subject to change.
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