HMRC Letter Targets Landlords with Unannounced Rental Income

The Let Property Campaign aims to help homeowners update their tax affairs through public relations. Recent data shows that HMRC receives more than 12,000 inquiries about income from renting properties or property campaigns. It is an effort to encourage landlords to report any rental income they haven’t disclosed. It could be an incentive for landlords who have to pay tax by selling rented residential property, either in the UK or abroad, to update their tax affairs in the UK. 

 The tax authority has also directed its resources to focus on people with second homes in the UK. HMRC is writing to landlords with unannounced rental income to inform them about the campaign and encourage them to update their tax affairs. The letter highlights no time limit on how far back HMRC can go to check someone’s rental income. It also reminds landlords that they need to declare their rental income whether they are UK residents.  

How do I participate in the Let Property Campaign? 

It applies in every respect, whether HMRC gave you a notification letter as explained later or made a disclosure by voluntary means. All steps must also include Registration. It means you notify HMRC that you have to disclose your income and handle your taxes. 

HMRC will return your receipt confirmation letter within 15 days and add your disclosure reference number. HMRC allows for 90 days for disclosure of unreported income, e.g., unreported income leased, inconsiderate tax, interest, and penalty. 

  • You must register by telling HMRC that you have undisclosed income from the let property. Registration is quick and easy to do online, and you will be given a disclosure reference number. 
  • Once registered, you will have 90 days to disclose all your previously undeclared income and liabilities. It can be done online, by post, or over the phone. 
  • You will need to pay any tax owed, plus interest and possible penalties. Payment terms can be agreed upon with HMRC, depending on your circumstances. 
  • Once you have fully disclosed and paid anything you owe, you will be given a Let Property Campaign closure letter. It will confirm that your tax affairs are now up to date. 

If you don’t disclose voluntarily and HMRC finds out, you could face much higher penalties – up to 100% of the tax due, plus interest. So, it’s always best to come forward as soon as possible. 

If you have any questions about the Let Property Campaign, please do not hesitate to contact HMRC. 

How Many Years Are Included in Your Disclosure To LPC? 

The period you will have to report property income depends on why you did so. Maybe you are cautious about your tax return, but you’re making just an error. When you disclose your financial information to HMRC, it is essential to know how these fits. Suppose you must notify HMRC of the tax you owe unless the wrong amount has already been remitted by 5 October of any tax year. Twenty years is your maximum time to pay your tax obligations. 

If You Are Unsuccessful in Notifying HMRC About Receiving Letting Income 

When you begin receiving letting income, HMRC must inform you in full on 5 October after your first income is received in the tax season in which you started earning the income. If you pay tax on rent from properties between 2021 and 2025, you must notify HMRC by 5 October 2022. In some cases, if a person has not completed the self-assessing tax form before the correct deadline, they must pay HMRC what is required for the next 20 years. 

Failure complete so may result in a penalty. The penalty amount will depend on how much tax is owed and when the failure to notify occurred. 

If you believe you have failed to notify HMRC about your letting income, you should contact them as soon as possible to discuss your options. It is always better to voluntarily disclose any information about your finances that you have not previously declared rather than wait for HMRC to investigate. 

If you want more information about letting income and tax obligations, you can contact HMRC or speak to a qualified accountant or tax advisor. 

What Should I Do If I Receive a Nudge Letter From HMRC? 

A letter to HMRC showing a suspicion your landlord was an unauthorized property owner. LPC’s straightforward approach seeks to effectively remove landlords’ tax evasion, making it almost impossible to escape. HMRC sends just one warning letter to those whose true suspicion has been raised that there have been irregularities in their taxes. So, after getting your copy of this document, you should act immediately and follow this procedure. 

If You Have Already Obtained a Nudge Letter From HMRC, You Should: 

  • Check the accuracy of the information in the letter. 
  • If you believe the information to be inaccurate, contact HMRC to dispute it. 
  • If you agree with the information in the letter, take appropriate action to rectify the situation. 
  • Keep records of your correspondence with HMRC. 
  • Seek professional help if you are unsure of how to proceed. 

How Can I Reduce My LPC Penalty? 

HMRC offers considerations for landlords and investors by reducing penalties, especially for a landlord who discloses a property voluntarily and has a reasonable reason. How can property information be disclosed to an accounting firm? This professional knows all about LPC. It will ensure you follow the procedure as much as possible throughout the procedure. They could significantly help reduce penalties as little as possible. 

Tell Me the Source of HMRC’s Information 

HMRC is supplied with information from many different sources, almost all over the world. They get information from footprints like land registers and tip-offs from the extended network. Aside from registering lands, they can also obtain information about: 

  • Companies and businesses 
  • Property transactions 
  •  Self-employed people 
  •  Trusts and charities 
  •  Financial institutions 

This information is used to help HMRC capture the exact amount of tax from the right people. 

Conclusion 

Suppose you would like more information about reducing your LPC penalty or letting income and tax obligations in general. In that case, you can contact HMRC or speak to a qualified tax accountant in Manchester  or a tax advisor. 

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