If you let out holiday properties or have switched to Airbnb or similar platforms, tax inspectors may be coming for you.
Accountancy firm UHY Hacker Young says HMRC is plotting a New Year clampdown on owners of holiday lets if they are suspected of failing to properly report earnings from the staycation boom of the last two years.
Neely Chauhan, a partner at the firm, says HMRC has the power to request information or documents from third parties such as holiday booking sites “for the purpose of checking the taxpayer’s tax position”. This includes entire databases of popular holiday booking sites.
“AirBnB has previously agreed to share information on income earned by its UK hosts as part of a 2020 tax settlement with HM Treasury. As part of the deal, the company agreed to pay an extra £1.8m in tax and share data on hosts’ incomes with HMRC” explains Chauhan.
The firm says owners of holiday flats and cottages will be filing their self-assessment tax returns that cover the first year of the Covid-staycation boom and may be tempted to under-report windfall earnings.
Chauhan adds: “With the boom in staycations driven by the pandemic, leading to a bumper season for UK holiday lets, it’s likely HMRC will come for their slice of the pie. HMRC will be checking tax returns from people who have let property for a jump in declared income to reflect the staycation boom. Their algorithms will fairly easily identify those holiday homeowners who they think are under-declaring income.
“As HMRC’s Let Property Campaign targeting buy to let landlords shows, the Treasury sees landlords as an obvious target for tax investigations and extra tax revenue. Landlords are recommended to make sure they are aware of their tax obligations before spending their summer ‘staycation’ windfall. Landlords who fail to declare unpaid taxes are ultimately risking fines and criminal prosecution.”
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