Buy-to-let investors increasingly on HMRC’s radar
The taxman’s annual take from buy-to-let income is up by more than 10% on the back of more scrutiny of landlords by HM Revenue & Customs, which is expected to intensify.
Issuing the alert, advisory UHY Hacker Young said buy-to-let investors paid £2.02bn in income tax on their rental income in 2010-11, up 13% from £1.78bn in the previous year.
The jump in the amount of money that HMRC receives from buy-to-let investments – which contractors often use instead of or with a pension – reflects its growing scrutiny of the sector.
Ensuring property investors are not evading their tax obligations has already inspired the formation of two dedicated HMRC taskforces (one in the South East, and one in Yorkshire).
But in what the advisor fears could be a “precursor to a wider initiative”, HMRC is now running a ‘property sales campaign,’ under which people who have not declared a property sale (other than their main residence) are urged to come clean.
“Once the deadline of September 6th 2013 has passed, we expect HMRC to become far more aggressive in pursuing undeclared rental income as well as property disposals,” explained Mark Giddens, head of private client services at UHY Hacker Young.
He added: “Buy-to-let investors need to be aware of HMRC’s increasing concern about tax evasion by landlords. Their actions to date show that they are quite capable of matching Land Registry records and data from letting agents with taxpayer files and picking out discrepancies.
“[And] as buy-to-let increases in popularity, there is inevitably more for HMRC to investigate. Some might simply fail to understand what their liabilities are and how to calculate them properly; others might think that they will be below HMRC’s radar.”