As reported in our news story in March the HMRC is really cracking down on the buy-to-let sector. This follows on from the success of the two specialist taskforces in the South East and Yorkshire that targeted property investors who had evaded paying tax on properties and that the amnesty is now being offered to all UK Landlords.

HM Revenue and Customs say that they have an underpayment of at least £500 million tax per year from investors with large portfolios and novice landlords who have not declared the full extent of their earnings from the buy-to-let market.

Despite these claims the HMRC is offering a tax amnesty to those who are guilty of deliberate or misguided tax evasion after it sent out over 1.5 million property letters.

All of the landlords and property investors have been warned that they have 18 months “to come clean” and settle their tax affairs correctly.

The new Let Property Campaign is now offering an alternative and cheaper method of payments if individuals prefer to settle their debts between now and February 2015.Those who have not signed up and are found out next year will not have the same settlement scheme being offered in the campaign.

 

A statement from  HMRC said: “Any penalty they pay by coming forward voluntarily will be lower than if HMRC comes to them first – which can be up to 100 per cent of the tax due and a possible criminal prosecution.

 “From next year, any landlord who may not have declared all their rental income may be contacted by HMRC. They will not then be able to make use of the opportunity offered as part of this campaign.”

Under tax law, all monies accrued from renting out residential properties, even holiday homes abroad or a single rental has to be declared to HMRC for income tax evaluation.

 

Marian Wilson, head of HMRC Campaigns said: “We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable,

 

"HMRC will use information it holds about property rental in the UK and abroad, along with information already held on HMRC‘s digital intelligence system Connect, to identify people who have not paid what they owe.”

Many advisors in the Industry have been forecasting that such a scheme would be implemented after news of the HMRC increase in revenues from the buy-to-let rose by a massive 13% from £1.78 billion to £2.02 billion in 2010-2011