Recent legislation changes means that HMRC has more power than ever before when it comes to accessing information from third parties about rental income you might be receiving.
In addition to obtaining information from Land Registry, Companies House, banks and building societies, HMRC are increasingly requesting information from Letting Agents regarding landlords and property rentals.
WHAT IS THE IMPACT OF THIS?
In time, HMRC will be able to cross reference this information to tax returns to submitted and be able to identify taxpayers who have not declared this additional income.
HMRC will then request tax returns be completed to account for the income received.
WHAT WILL THIS COST?
HMRC can currently charge £100 for late disclosure of the income source, an initial £100 for late submission of the tax return, further penalties of up to £900 for late submission of the tax return and a tax-geared penalty of up to 100% of the resulting tax liabilities.
These penalties can really mount up and of course, HMRC charge interest on these penalties and the liabilities and at a higher than base rate percentage to boot!
If you have a second property that you are renting out that HMRC are not yet aware of, we would strongly recommend that you take action now.
Approaching HMRC with details of this income and the expenses incurred (as there are lots you can offset), filing your tax returns and settling your tax liabilities now will be regarded more favourably by HMRC when it comes to assessing penalties for late disclosure of the income.
If you would like any assistance in completing your tax return or advice surrounding the expenses that you can offset, please contact Christine Wallwork (email@example.com) on 0161 456 9666.