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HMRCs Property Tax Campaign

Thursday, 13 February 2014

HMRC’s online progress report states that a property sales campaign targeting those who have profited through owning and selling second homes or multiple properties started back in March 2013. This property tax campaign offers those who have failed to comply an opportunity to come clean on advantageous terms under voluntary disclosure protocols follows targeted taskforces that have looked at propertytransactions in London a year or so ago and property rentals in several regions during last summer.

These must have confirmed HMRC’s suspicions enough to justify a switch to the new disclosure strategy.

It isn’t clear yet which property owners will be targeted. Could multiple properties include owners who have moved from one Principle Private Residence (PPR)to another a “multiple” number of times?

Having said this, the likely hood is that HMRC is going to concentrate on the buy-let landlords. When HMRC targeted buy to let landlords with three or more properties in the North West and North Wales the results were compared with the landlords tax return re income from land and property supplementary pages and the CGT pages.

HMRC has produced a tax evasion report in which HMRC stated that they were pleased with the results gained from “ third party data” and found non-disclosure in one instance by an individual who owned 11 properties in several Mediterranean countries.

So what are those “third party data” that HMRC are using, they are most likely to be the following:-

Banks. They are required to provide more information now than just details of interest over a set amount.

Property Website. A mine of information not only for a house purchasers and renters. It produces an estimate of the capital appreciation of a house since the last transaction.

Credit Agencies. Such as Experian are to give details of loans and mortgages as well as Identifying linked names and addresses.

Databases. The Northgate Public Services Information System is just one used by HMRC that contains details of housing benefits paid to landlords by any UK Council.

• Land Registry Details of title to a property.

• Electoral Register A first place to look.

• Property Purchase Scheme. Since July 2011 these require the declaration of NI numbers for individuals and Unique Taxpayer Reference (UTR) and/or Vat registration number for partnerships and companies.

• Deposit protection scheme. Obtaining details of deposits held and to which property they relate and the relevant landlord/tenant.

HMRC uses it’s connect computer system which draws and analysis data from multiple sources including property ownership and transaction data. This system has been linked for a few years now to the Valuation Office in Worthing bringing together information that was previously spread over the UK in the separate district councils. Thus having access to details of property values over the UK.

Collating information this way makes it easier to compare, for example by producing historical lists of property ownership by landlords.

HMRC are fully aware that there are landlords out there who have property portfolios and are not declaring property income or gains on disposal of a buy to let property and HMRC are going to use the methods set out above to track these landlords down as there is a lot of tax at stake and HMRC want it.

So if you are a buy to let landlord with either a single property or one with multiple properties and you have not disclosed the income from your rental properties or the gains on disposal of a buy to let property contact ourselves before HMRC contact you.       

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