Partner Article

Taxman targets landlords

Charles Linaker, a tax partner at UNW, chartered accountants and business advisers, is advising all landlords to make sure their tax affairs are in order.

This follows on from the recent announcement, just before the Jubilee weekend, when Her Majesty’s Revenue and Customs announced six new taskforces in its latest initiative to combat tax evasion and enforce compliance in specific commercial and geographical sectors.

Principal amongst these was the property rental sector where HMRC expects to recover more than £17 million in undeclared tax from non-compliant landlords based in Durham, Sunderland, York, Leeds, London, East Anglia and East Midlands.

Other taskforce targets are:
• the restaurant sector in the Midlands, where HMRC expects to add another £2.5 million to the £13 million anticipated yield from its current work on restaurants in Scotland, the North West and London, not to mention adding to the 30 prosecutions already under way;
• taxi firms in the East Midlands, Yorkshire and Derbyshire, where the expected yield is £2 million; and
• London’s market traders, including the likes of Covent Garden and Petticoat Lane, where the expected yield is £1.85 million.

Charles says a common denominator with all of these sectors is the prevalence of cash as a means of payment but, in addition, HMRC is acting on the basis of specific intelligence of widespread tax evasion.

That being the case, those landlords in the North East, who have either not declared their rental income to HMRC or who have under declared their rental income in their Self-Assessment returns, would be well advised to make a voluntary disclosure now to HMRC rather than wait for the property taskforce to catch up with them. Such a step can make a significant difference to the size of any financial settlement with HMRC as well as rendering prosecution less likely.

Indeed, with HMRC set to announce more task forces during 2012-13, voluntary disclosure should be considered seriously by anyone who has understated his or her income when filing returns or who has failed to notify chargeability before now.

This was posted in Bdaily's Members' News section by Lisa Kelly .