In a bid to ensure property investors are not neglecting their tax obligations, HMRC has already formed two new dedicated taskforces in the South East and Yorkshire. Additionally, HMRC is also running a ‘property sales campaign’, under which investors who have not yet declared a property sale – other than their main place of residence – are urged to speak out.
A spokesman for HMRC said: “Our enquiries are risk based, enabling us to concentrate our resources on the non compliant, reducing the burden on honest taxpayers. We risk assess returns using a variety of methods, as well as cross-matching database information, both our own and external. Enquiries into the disposal of second homes is just one area we look at.”
The warning comes ahead of a widely predicted rise in capital gains tax, which is expected to be announced in the emergency Budget. Under the Freedom of Information Act, accountants UHY Hacker Young found the taxman retrieved an extra 23 per cent in capital gains tax in the past two years following a special investigation. Mark Giddens, head of private clients services at UHY Hacker Young, said: “Once the deadline of September 6th 2013 has passed, we expect HMRC to become far more aggressive in pursuing undeclared rental income as well as property disposals.
“Buy-to-let investors need to be aware of HMRC’s increasing concern about tax evasion by landlords. Their actions to date show that they are quite capable of matching Land Registry records and data from letting agents with taxpayer files and picking out discrepancies.
“[And] as buy-to-let increases in popularity, there is inevitably more for HMRC to investigate. Some might simply fail to understand what their liabilities are and how to calculate them properly; others might think that they will be below HMRC’s radar.”
If you are worried that you might fall into this category, please do not hesitate to contract TI Payroll and Accounting and we will assess your situation make sure you are fully compliant with HMRC’s regulations.