HMRC warns Buy-to-Let landlords
Only 500,000 (approx) taxpayers have told HMRC they own more than one property. Yet Britain's fast-growing armies of amateur and professional buy-to-let landlords are thought to number close to 1.5m.
Clearly not enough landlords are declaring their property income and capital gains. How afraid should they be?
Cross-checkingHMRC wants them, of course, to be very afraid. The taxman has been ratcheting up the pressure with campaigns and increased public information since 2011, giving people the chance to declare. But the next stage will be cross-checking with Land Registry data; even checking with letting agents.
However HMRC's arsenal of tracking tools have been boosted by the 2007 introduction of tenancy deposit protection rules, with much of this information available to HMRC employees. Following up online adverts and mobile numbers can also be used.
Rent from letting out a property or holiday home has to be declared. Buy-to-let landlords will want to cut the HMRC tax-take by as much as possible: mortgage interest can be offset against rent, encouraging landlords to max up on borrowing; basic and regular maintenance can also be off-set, not to mention various fees and insurance.
Clean up?But though the HMRC has good intentions, the latest clear-up figures so far are less than impressive. In a press release, HMRC acknowledged that though several criminal convictions are under way, only seven have been convicted with prison sentences of up to two years.
It does claim to have however collected more than £552 million in tax from people coming forward, and more than £224 million from a large number of follow-up activities.
"Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available," says the agency. "The message for all landlords owing tax is simple – it is better to come to us before we come to you.
GainsIn terms of taxable property gains, David Cox of the National Landlords' Association told the Telegraph that most serious landlords "are in business for the long-term and so do accrue capital gains. Any landlord selling up now, for instance, who bought in the Nineties, is likely to have a substantial tax bill."
Meanwhile, how about a national landlords register? This move - it potentially could make HMRC's job a lot more straightforward - is being pushed by Labour MP Sir Alan Meale. Watch the (barely attended) House of Commons second reading of Meale's private member bill on the subject.