HMRC tells landlords to ‘put their house in order’, warns accountant James Cowper Kreston

Residential landlords can expect a knock on the door from HMRC as it seeks to recover an estimated £500m unpaid taxes a year.

HMRC has launched what it calls its ‘Let Property Campaign’ to target buy-to-let, student and holiday let landlords that it believes are underpaying or deliberately not declaring rental income.   The campaign builds on previous initiatives aimed at plumbers and electricians, building contractors, takeaway restaurants, motor traders and many other sectors that have collectively seen HMRC collect over £800m in unpaid tax.

Stephen Barratt, Private Client Tax Director at James Cowper Kreston said: “This campaign is designed to give residential landlords the opportunity to come forward and disclose any unpaid or under paid tax.  This is a window of opportunity to get tax affairs in order before HMRC comes knocking.”

In targeting residential landlords, HMRC recognises that there will be instances where individuals have either deliberately not declared rental income on let properties or made an honest mistake.  This distinction is important when looking at what penalty might be imposed.

Stephen adds: “HMRC is using increasingly sophisticated software to identify those who are not paying sufficient tax and the chances of going undetected are therefore diminishing.  This campaign offers landlords the opportunity to come forward voluntarily and pay any unpaid tax, interest and penalties at a preferential rate.

“Landlords who continue to close the curtains and hide behind the sofa can expect HMRC to find them and enforce much stiffer penalties or even criminal prosecution.”

James Cowper Kreston offers this advice to those residential landlords who believe that they may have an outstanding tax liability:

• Do not approach HMRC directly without first speaking with an accountant or tax adviser.  HMRC is an increasingly tough negotiator and without detailed knowledge of the tax system larger tax bills and penalties than necessary might be charged.
• Do not ignore this clampdown.  It is possible that HMRC is already aware of your financial details.  If HMRC make the first move because no voluntary disclosure has been made, penalties can be expected to be more severe.

Stephen Barratt, Director, James Cowper Kreston LLP, +44 (0)1635 35255 or email