An accountancy firm claims that buy to let landlords who admit evading tax on their rental income have underpaid to HMRC by some £4,480 last year.
UHY Hacker Young says this average under-payment is some 72 per cent higher than the under-payment a year earlier, which was typically £2,610.
Now the accountancy firm says the long-standing HMRC ‘Let Property Campaign’ is proving itself by encouraging some evading landlords to come forward.
Clive Gawthorpe, partner at UHY Hacker Young, says: “When landlords who are hiding income get a warning letter from HMRC, they realise that HMRC is closing in on them and they can no longer hide.”
“HMRC is giving landlords a chance to confess and in return, it will lessen the penalties imposed. This will be the most favourable outcome for landlords and any with undisclosed income ought to take that opportunity before it’s too late.”
“If a landlord decides to come forward under the campaign, it’s better to do it with professional advice, particularly if their tax affairs are complex. This will be key in helping avoid any mistakes and the possibility of further investigations by HMRC.”
The Revenue’s Let Property Campaign started seven years ago and encourages buy to let and holiday home landlords to confess to unpaid tax bills.
Seven years ago HMRC claimed some 1.5m landlords were underpaying tax.
Gawthorpe continues: “Our advice is not to wait for HMRC to come calling. The taxman is likely to show a degree of leniency to those who come forward and declare unpaid taxes. The alternative is potentially big fines and possible criminal prosecution.”
In 2019 HMRC found 11,129 landlords either under-paid or failed to pay income tax on rental income compared to 8,704 in 2018.
The Revenue reclaimed £44.7m in tax from landlords last year, up from £32.8m the year before.