HMRC is increasingly using information received from third parties to check whether landlords are declaring their rental income correctly.
It has started writing to landlords where information held by HMRC does not appear to match the figures reported by the taxpayer.
This information can come from sources including tenancy deposit schemes and other statutory reporting systems, giving HMRC greater visibility over property income.
What should you do if HMRC contacts you?
If you receive one of these letters, do not ignore it.
HMRC will usually ask you to review your records and respond by the deadline stated in the correspondence.
If rental income has not been fully declared, a disclosure may need to be made. Even where you believe everything has already been reported correctly, HMRC may still expect a response confirming your position.
Timing can also be important. HMRC warns that disclosures made after it has opened a formal compliance check or investigation may be considered “prompted”, which can result in higher penalties.
The letters may also ask landlords to consider whether:
- Capital Gains Tax was due following the sale of a rental property.
- They fall within Making Tax Digital for Income Tax.
- Their rental income has been fully reported.
Keeping accurate property records and dealing with HMRC correspondence promptly is increasingly important.
If you receive a letter and are unsure how to respond, please send it to us as soon as possible so we can review your position.
