Let Property Campaign – What Landlords Need to Know

The Let Property Campaign, launched by HMRC, provides landlords with a chance to disclose unpaid tax on UK or overseas residential property income under favourable terms. By acting voluntarily, landlords can minimise penalties and avoid the possibility of criminal investigations. However, failing to comply can result in penalties as high as 200% of the tax owed.

Using an extensive network of third-party data sources, HMRC is intensifying its review of landlords’ tax affairs to close compliance gaps.

How HMRC Uses Nudge Letters and Data Sources

As part of this initiative, HMRC is sending nudge letters to landlords, encouraging them to confirm the tax status of their properties and rental income. These letters may also explore whether Capital Gains Tax (CGT) is due on property disposals.

To detect discrepancies, HMRC collects information from multiple sources:

• Land Registry: Identifying ownership periods for multiple properties.

• Rent Deposit Schemes: Estimating rental income based on deposit amounts.

• Overseas Data Sharing: Revealing offshore property holdings and income.

Where mismatches occur, HMRC can launch formal inquiries, which may span up to 20 years for deliberate tax avoidance cases.

Success Story: Supporting a Non-Resident Landlord

We recently assisted a non-resident landlord, a Chinese national, in disclosing six years of undeclared UK rental income. By leveraging the benefits of the Let Property Campaign, we successfully negotiated with HMRC to reduce the penalty to just 10%, securing the most favourable outcome for our client despite the risk of severe penalties.

Additionally, we secured a personal allowance claim under a special case, a notable achievement as Chinese nationals typically don’t qualify for this relief. This outcome not only minimised the client’s liabilities but also demonstrated the value of expert advice in navigating complex tax rules.

What to Do If You Receive a Nudge Letter

Receiving a nudge letter can be daunting, but the right steps can ease the process:

• Respond promptly: Ignoring the letter may lead to formal investigations.

• Check your records: Ensure all rental income, expenses, and CGT liabilities are accurate.

• Explain void periods: Provide evidence for times when properties were unoccupied or under renovation.

• Consult a professional: A tax advisor ensures your response is accurate and compliant.

Failing to address HMRC’s inquiries could lead to higher penalties than those offered under the Let Property Campaign.

How TTAX Can Help

At TTAX, we specialise in assisting landlords and property investors with tailored tax services, including:

• Self-Assessment Tax Returns: Accurate reporting of rental income and expenses.

• Property Tax Advice: Expert guidance on CGT, SDLT, and other property-related taxes.

Take control of your tax affairs before HMRC contacts you. Proactive action can save you time, money, and stress. Contact us today at info@ttax.co.uk to learn how we can help.