The Let Property Campaign is designed to encourage residential property landlords to come forward and voluntarily disclose any undeclared rental income to HM Revenue & Customs (HMRC).
Although the campaign will be directed at all residential landlords, HMRC is particularly focusing on:
- Landlords who let to students/groups of workers.
- Landlords who let out holiday accommodation.
- Landlords who let out properties for multiple occupancy.
HMRC estimates that up to 1.5 million landlords may be underpaying £500 million in tax every year. In a departure from previous campaigns and in recognition of the sheer scale of the potential numbers involved, HMRC intends to run the campaign for at least 18 months.
HM Revenue & Customs (HMRC) launches campaigns to prompt a targeted group of individuals, traders or professionals to do something voluntarily. That something might be to make a declaration of undeclared income and / or over claimed expenses, or it may be a campaign designed to encourage the submission of outstanding Tax or VAT Returns.
Campaigns can sometimes be misleadingly described as ‘amnesties’. However, campaigns are not an opportunity to avoid, evade or pay less tax or VAT as the term amnesty suggests. They are an opportunity to achieve a lower penalty on any additional tax or VAT resulting from a disclosure or submission.
During an enquiry or other compliance check outside a campaign, the penalty chargeable would be based on the behaviour of the entity involved (the individual or business), the quality of the disclosure and whether the disclosure was completely unprompted or prompted by HMRC action. The maximum penalty chargeable under these conditions can be up to 100% of the additional tax, so in simple terms, if £10,000 is owed in tax, HMRC can charge a £10,000 penalty.
In practice, beneficial penalty terms are offered during campaign activity to encourage the voluntary action desired, with the terms on offer varying from one campaign to another.
HMRC’s Business Plan 2012-15 includes a commitment to begin 4 national campaigns every tax year.
Author: Guy Smith, Senior Tax Consultant on the ReSource Tax and VAT Consultancy Team.