Tax & Accounting News

Accountants Urge Buy-to-Let Landlords to Seek Tax Advice

25/03/2008

Owners of buy-to-let properties should seek professional advice to make sure they do not fall foul of the taxman over their rental income, say North London-based chartered accountants and licensed insolvency practitioners Harris Lipman.

The warning follows media reports last month that HM Revenue & Customs (HMRC) was writing to hundreds of landlords who complete self assessment tax returns, and their accountants, seeking clarification of income earned through property rental. It was subsequently reported that HMRC had denied targeting landlords but was issuing the letters to help self assessment taxpayers ensure their tax affairs were in order.

The HMRC letter says that it is seeking information to give landlords the opportunity to put right any tax errors and warns that interest may be charged on late payments of tax, with penalties for income not previously declared.

Harris Lipman senior partner Barry Lewis said: “These letters follow previous HMRC initiatives along similar lines, which suggest that HMRC has a particular interest in landlords’ tax affairs. It would certainly be a wise move from anyone who earns income from a buy-to-let or other rental property to seek professional advice, so that they can be sure their tax affairs are in order.

“The law allows HMRC to pursue unpaid bills going back up to six years and with late or unpaid tax attracting heavy fines and penalties, failure to pay the correct sums can prove very costly.”

The latest HMRC inquiries follow a similar exercise to claw back unpaid tax in 2007, which itself followed a national advertising campaign by HMRC earlier that year to remind landlords of the need to declare rental earnings and pay the tax due on any profits.

Buy-to-lets form a significant sector in the UK property market. According to the Council of Mortgage Lenders, at the end of 2007 there were more than one million buy-to-let mortgages in circulation and buy-to-let lending totalled £24.1 billion in the second half of 2007.

For more information please call 0208 446 9000.

 

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